Hasan (may Allah have mercy on him) said: A man died and left two thousand dirhams, and he owed as much or more in debt. He said: From this, his shrouding and burial will be arranged, and the debt will not be paid.
Hadith Referenceسنن دارمي / من كتاب الوصايا / 3270
Hadith Gradingتحقیق (حسین سلیم أسد الدارانی):إسناده صحيح إلى الحسن، [مكتبه الشامله نمبر: 3281]
Hadith Takhrijاس اثر کی سند صحیح ہے، لیکن کسی اور نے روایت نہیں کیا۔ اسی کے مثل [ابن أبى شيبه 1922] میں ہے۔
Brief Explanation
(Commentary on Ahadith 3268 to 3270)
If the deceased has a debt, then it is necessary to pay off the debt before anything else. However, if there is not enough wealth to pay the debt, then first and foremost, arrangements should be made for his shrouding and burial (kafan-dafn), as Hasan rahimahullah has stated.