What Happens to Your Credit Card Debt When You Die?

The sad thing about credit card debt is that when you die, it does not die with you. It lives on, and will either be paid off via estate assets or become the responsibility of the co-signer or joint account holder. When it comes to community property states, most of the debt that incurs during the marriage will become the responsibility of the couple, even if there is only one spouse listed on the account.

Who Pays For Your Debts When You’re Gone?

When a member of a family passes on, their relatives usually won’t be responsible for paying off their credit card debts, but there are some exceptions. These exceptions are jointly-owned properties or businesses, co-signed credit cards and loans, or are required by the state to pay a debt, like expenses for health care. 

Unless one of those conditions is applicable, then credit card users that are authorized will not need to pay the debts of the deceased. When it comes to joint accounts, the cardholder that is still alive will need to continue making payments on time, so that they do not incur late fees or negative credit reports. A balance transfer can be performed in this instance.

How Will Your Debts Be Paid After You Die?

Probate is the legal process of having your debts be paid off and distributing what is left of it to your heirs. Unless you make other agreements or have a living trust, then a probate court will decide your financial affairs after you’re gone. In most US states, a court-appointed executor, or one that is named in your will, will be responsible for your estate’s final details. 

The probate process can either be straightforward or take months or years in the probate court to sort out. One simple situation, for instance, could be where someone with credit card debt that is unmarried and does not have any assets. In this case, the creditor will likely not collect the debt. 

If the person that had the credit card did have assets, then it will need to be determined whether the creditor has access to those assets. If the deceased had a life insurance policy, the payout would need to go to the deceased’s beneficiaries before the debt is paid.

Can Probate Be Avoided?

Probate can be avoided, and the best way to do so is to have a living trust since your assets that are in a trust will not be affected by probate. The trust will assume ownership of the assets, which will then be distributed according to the trust’s instructions. 

The trust will also let your beneficiaries save money and time that might have been spent on the process for probate. It will also let them talk and negotiate with credit card companies if their deceased loved one has credit card debt outstanding. 

Even if your family has no need to open a probate case to settle your estate, the creditors you owe money to after your passing might sue. To mitigate this, a lawyer or executor could negotiate the debts with them, since they will have substantial upfront costs for filing the probate’s claims.

How to Avoid Passing Down Your Debt

If you want to prevent your family from dealing with your credit card debts after you pass, you should consider hiring an attorney to create a trust or will. Planning your estate can help determine exactly where your assets will go when you’re gone, which will help your loved ones save both money and time. 

Try to remember that, even if your plan is comprehensive, your family might still be bothered by your ex-creditors. Debt collectors have been known to contact family members, even if they are aware that the relatives of the deceased are often not responsible for paying off the deceased’s accounts. 

Thankfully, your family is protected under the Fair Debt Collection Practices Act. This is a federal law that was created to prohibit the abusive and deceptive contact by debt collectors. Your family members can make a request to prevent collectors from contacting them, but the debts will still have to be dealt with. Make sure that your family is clued up about what is and is not their responsibility. 

At the end of the day, the best thing you can do is try to keep your records organized. Your family members should have quick access to your lookup balances and credit card accounts.


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