Is it permissible for the debtor to deduct what he spent on the creditor's funeral from the principal debt when returning it to the deceased's family?

The debt transfers upon the death of the creditor to his heirs. Nothing from it may be disposed of except with their permission. The entire amount is the responsibility of this person, and he must return it to the heirs. If they waive any part of it in return for what he spent, then they are entitled to do so.