What Happens To Your Credit Card Debt After Death?


When a person leaves credit card debt after death, certain things can happen. The debt will be borne by the deceased’s estate, but if the estate cannot pay it off, a co-signer or a surviving spouse may be responsible. Or, the credit card company may have to write off the debt entirely.

Sorting out the financial accounts of a loved one after death can be complicated, especially if there is debt. If you’re managing the credit card debt of a deceased family member, read this guide to find out how it works.

What happens to credit card debt after death?

When a person dies, their estate is legally obligated to pay off their debts, including credit card debts. An estate is all the money and property that a person owns. The person who is responsible for managing the estate, known as the executor or administrator, pays the credit card debt using the assets of the estate in a process called probate.

For a simple example, let’s say a person dies with $ 25,000 in the bank and $ 5,000 on their credit card. The executor would use $ 5,000 from this bank account to pay the credit card companies. If there were no other debts, the remaining $ 20,000 would go to the beneficiaries of the deceased (the beneficiaries of the property of a deceased person).

It can be more complex depending on the assets and debts a person is leaving behind. Some assets, like life insurance policies, are not used to pay off estate debt. These are paid directly to a beneficiary under the insurance contract.

If the deceased had more than one type of debt to different creditors, they are usually paid off in the following order:

  • Debt to the federal government, such as tax debt
  • Debt to a state government
  • Secured debt, such as a car loan
  • Administrative and legal fees for the estate
  • Unsecured debt, such as credit card debt

What if the estate cannot pay the credit card debt of the deceased?

Some estates do not have the assets to pay off credit card debt. In this case, what happens to the debt depends on someone else’s legal responsibility.

Here are the two situations in which you can inherit credit card debt:

  • If someone else was a co-signer or joint account holder on the credit card, then they are responsible for paying it off.
  • A surviving spouse is responsible for a deceased’s credit card debt if they live in a state with communal property laws. States with communal property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington State, and Wisconsin.

If any of the above applies to you, then you would be legally obligated to pay what is owed to you. For large balances, you may want to spend some time looking at the best ways to eliminate credit card debt. This can help you find the right debt repayment method.

Learn more: How To Get Out Of Credit Card Debt

Authorized users on a credit card account are not responsible for unpaid debts when the primary account holder dies. It should also be noted that they are not allowed to continue using the account. Use of a deceased person’s credit card account, including as an authorized user, is considered credit card fraud.

If no one else is legally responsible for the credit card debt and the estate cannot pay it, then the creditors will have to write it off.

How to manage the credit card accounts of a deceased person

It is the responsibility of the executor or administrator of the estate to clean up the financial accounts of a deceased person. This person is named in the will, but if there was no will, the court will appoint someone to this position.

This can be difficult when you are responsible for managing the credit card accounts of a deceased person. Here are some steps that can make your job easier.

1. Make a list of the deceased person’s credit cards

The first step is to get organized by listing all of the deceased’s credit cards. It’s also a good idea to list and, if possible, access their other financial accounts at this time. Since you will need to pay off the estate’s credit cards, it helps to know what assets the estate has.

2. Do not use or let anyone else use these credit card accounts.

Once a person dies, it is fraudulent to use their credit card account, including for authorized users. The only exception is a joint credit card account. If you and the deceased had a joint account on a credit card, you can continue to use it.

Other than that, make sure you are not using the deceased person’s credit cards at all. If there were any authorized users, tell them to destroy or return their cards linked to the account.

3. Notify credit card issuers

Contact the card issuers for all of the deceased’s credit cards. You can find the phone number on the back of each card.

When you call, a representative can point out the account and explain the process of closing the credit card. Credit card companies usually require that you send them a copy of the cardholder’s death certificate to close the account.

This is also when you can discuss repaying the balances of these credit cards. Or, if the deceased’s assets aren’t enough to cover them, you could potentially negotiate credit card debt with the card issuer.

4. Notify the credit bureaus

Contact the three consumer credit bureaus: Equifax, Experian, and TransUnion. It is important that they are aware of the death so that they can note it in the credit report of the deceased. This prevents identity theft as no one will be able to open new credit accounts in the name of the deceased.

Dealing with debt collectors

If the deceased had unpaid debts, you may be contacted by a debt collector. Even though debts are supposed to be paid by the estate in sequence, it’s not uncommon for debt collectors to try to cut the line.

It is best to leave the refund to the executor. If you are the executor and are unsure of what to do, consulting an estate lawyer can help.

Keep in mind that you don’t need to talk to debt collectors. The Fair Debt Collection Practices Act gives you the right to request in writing that a debt collector stop contacting you. Once they receive your demand letter, the debt collector can only contact you to confirm that they will stop moving forward and to tell you that they are taking specific action, such as taking legal action. .

Dealing with a loved one’s debt after death can be emotionally and financially difficult. Hopefully, knowing more about what to expect – and what you may or may not be responsible for – can help make the process a little easier.


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