What Happens to Credit Card Debt When You Die

When you or your loved ones die, credit card debt will be resolved within the estate. If there are no assets in the estate, you or other heirs may not be responsible for paying the debt. What happens if you die with credit card debt? Read on to understand what happens to credit card debt when you die and how to protect your partner, spouse or children.

Does Credit Card Debt Die With You?

Credit cards do not die with you. As part of the process of settling the estate, any money, property or other assets will go toward repaying the debt. If there’s no money left in the estate after other debts like a mortgage or auto loans, credit card debt will go unpaid.  

According to the Consumer Financial Protection Bureau, survivors of deceased loved ones, including spouses or children, aren’t responsible for debts of the deceased unless it is a shared debt. If you’re the co-signer on a loan or joint account holder or fall under another exception in which you have responsibility, you may be responsible for the debts. But as a rule, you aren’t responsible for the debt if you weren’t on the account. 

Determining Credit Card Liability After Death

Who is responsible for managing the debt after death depends on the circumstances. All account holders are responsible for the debt if there is secured or unsecured debt in joint names, such as a mortgage or credit card debt. If one account holder dies, the estate may be used to pay part of the debt, or the joint account holder may be responsible for the whole debt.

If there is only one account holder, the estate will be used to pay off the total debt. If there is not enough in the estate to cover the credit card debt, the debt may go unpaid. There are exceptions. Read on to understand the implications.  

Your Estate

Generally, your estate will be responsible for paying off credit card debt. Here’s what you need to know.

Who Is Responsible for Paying Off the Credit Card Debt?

The estate will be responsible for paying off credit card debt unless the account has a joint account holder. If necessary, learn how to remove a charge-off without paying. 

How Can the Estate Pay Back the Credit Card Debt?

If there’s enough money or assets in the estate, the executors will be responsible for paying off credit card debt using that money. 

What if There Are Not Enough Assets in the Estate to Cover All Debts?

The debt may go unpaid if there are not enough assets in the estate to cover all debts. A surviving spouse in a community property state is usually required to use jointly held property to pay the debts of a deceased spouse or if state law requires surviving spouses to pay a particular debt. In some states, if the surviving spouse is the executor or administrator of the estate, you may be required to pay the debt. 

On the other hand, when state law requires the estate to pay survivors first, there may not be any money left over to pay debts.

What Happens to Joint Accounts or Authorized Users?

Joint account holders may be responsible for some or all of the credit card debt. Authorized users are not responsible for the account and, therefore, aren’t responsible for paying off the debt. However, it’s important to stop using the card if the primary cardholder is deceased. 

Your Spouse or Partner

Spouses or partners’ liability for debt will depend on state laws and whether they are co-signers or joint account holders on the credit card account. 

Does My Spouse Have to Pay Off My Credit Card Debt After I Die?

Whether your spouse has to pay off credit card debt after you die depends on three main factors, although there can be additional exceptions:

• Are they a joint account holder?
• Do you live in a communal property state?
• Is the estate executor required to pay outstanding bills?
• Are they a co-signer on the credit card accounts?

Will My Spouse’s Assets Be Affected by My Credit Card Debt After Death?

Your spouse’s assets may be affected if they are responsible for credit card debt after death. If you live in a community property state, your spouse will usually be responsible for credit card debt. These states are:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

If your spouse was not a co-signer, joint account holder or other exception, only the deceased’s estate owes the debt. It’s best to speak to an estate attorney to set up your and your spouse’s accounts to protect you both in case the worst happens. 

Does Community Property Apply to Credit Card Debts?

Yes, generally, all credit card debt falls under community property. Debt acquired as a result of purchases, including mortgages, auto loans, student loans and credit card debt, all fall under community property.

Are Spouses Responsible for Authorized Users or Joint Accounts After Death?

Spouses are usually responsible for joint accounts after death but won’t usually be responsible for authorized user accounts. 

Your Heirs and Beneficiaries

Generally, your heirs and beneficiaries aren’t responsible for paying your credit card debt if you die. However, your estate will pay the debts before the heirs receive their inheritance. This can mean that, for example, a family home must be sold to pay off debts if there isn’t enough cash in the estate. 

Will My Heirs Be Responsible for Repaying My Creditors After I Die?

Heirs won’t be responsible for paying the credit card debt from their funds unless they are joint account holders. The estate is generally responsible for paying the debts before the heirs receive an inheritance. If there is enough money in the estate, the estate executor will use that to pay debts. The estate will sell a property or other assets to pay debts if insufficient funds exist. 

When Does Credit Card Debt Not Become a Responsibility of Others?

Credit card debt usually is not the responsibility of others, but there are a few notable exceptions.

• In the nine community property states, spouses or partners can be responsible for credit card debt.
• Joint account holders can be responsible for part or all of the credit card debt.
• Co-signers on loans or credit card debt can be responsible for credit card debt. 

Unsecured debts, such as credit card debt, personal loans and medical debt, are typically discharged or covered by the estate and aren’t passed on to heirs or surviving family members. The best way to protect family members is to plan how to pay off credit card debt fast. 

What Heirs Should Do When the Cardholder Dies

Family members or relatives should take certain steps when the cardholder dies to protect their loved one’s credit score and assets. Here’s what you’ll want to do. 

Organize Documents and Accounts

The first step is to understand your loved one’s accounts. Check for access to accounts to make payments and gather all credit cards, bank statements and other financial documents. Then, take steps to pay all outstanding debts and freeze accounts. 

Stop Using the Credit Cards

Next, be sure to stop using credit cards. If joint account holders or authorized users are on the deceased person’s credit card accounts, they should also stop using the accounts until the account can be transferred to their name or canceled. If you are an authorized user, it is often classified as fraudulent to continue using a card after the primary cardholder’s death.

Notify the Credit Card Companies

You should notify the credit card companies as quickly as possible after a loved one’s death to prevent unauthorized use of credit cards. Most credit companies and banks will ask for a copy of the death certificate to close an account and then handle debt collection accordingly.

Request a Credit Freeze

Request a credit freeze for the deceased family member. This can protect against identity theft. Thieves often search online obituaries and try to take over a deceased person’s identity or accounts. Protect yourself and your loved ones from this hassle by notifying the three main credit bureaus to freeze their credit. 

Know Your Rights

As the surviving spouse or heir of a family member with credit card debt, creditors may still approach you and attempt to collect the debt. It’s not legal for them to imply or state that you’re personally responsible for paying the deceased person’s debts from your assets unless you fall into one of the exceptions listed above. If creditors contact you, don’t confirm the debt without first speaking with an estate attorney about the appropriate steps. 

Paying Off Debt

What happens to debt when you die? As it’s clear from above, it depends on the situation, but in many cases, your loved ones aren’t responsible for the debt. Losing a loved one is a stressful time. Worrying about debt and dealing with grief can be a huge burden on many families. If you want to take steps to protect your family now, consider the best ways to consolidate credit card debt, which credit cards to pay off first and get strategies to pay off credit card debt this year. 

Frequently Asked Questions