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Losing a loved one is difficult enough without having to worry about their unfinished financial affairs. You may get calls from creditors about credit card debt the deceased left behind and wonder if you’re on the hook to pay it.
Usually, family members don’t have to use their own money to pay off a deceased person’s credit card debt. The estate of the deceased person is in charge of paying off debts. Still, there are a few things you should know about
How Credit Card Debt Is Handled After Someone Dies
When someone dies, all of their assets and debts become part of their estate. This can include things like:
- Money in bank accounts
- Investments
- Real estate
- Cars
- Personal possessions
- Unpaid bills and credit card balances
The executor named in the will handles the estate. If there’s no will, the court appoints an administrator.
The executor or administrator goes through probate court and pays off the debts of the person who died by using the estate’s assets. Creditors are paid back with any money or property that is left in the estate.
The Credit CARD Act of 2009 says that when a credit card company hears that a cardholder has died, they must stop adding fees or interest to the account.
If there aren’t enough assets to cover all debts, creditors may have to write off the remaining balances. They can’t pursue relatives to pay from their own pockets, with a few exceptions.
When You May Be Liable for Credit Card Debt
There are some cases where you could be held responsible for credit card debt after someone dies:
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You were a joint account holder. If you and the deceased person jointly held a credit card account, you’d be required to repay the balance on that joint account.
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You were an authorized user. Authorized users aren’t generally liable for credit card debt after death. They’re allowed to use the card but didn’t agree to be responsible for balances.
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You co-signed on the account. As a co-signer, you’d be obligated to repay balances on accounts you co-signed.
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You live in a community property state. In community property states, a surviving spouse may have to use jointly owned funds to pay debts of the deceased spouse.
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State law holds you responsible. Some state laws require a surviving spouse to pay certain debts, like healthcare expenses of the deceased person.
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You mishandled the estate. As executor, you may be liable if you improperly administered the estate according to state probate laws.
Unless one of these special circumstances applies, relatives do not have to personally repay credit card debt after someone dies. The estate is on the hook.
How Collectors Can Contact You
Debt collectors may contact certain family members of a deceased person regarding unpaid debts:
- Surviving spouse
- Parents of deceased minor children
- Executor or administrator of estate
- Attorney representing the deceased person’s estate
Collectors must follow consumer protection laws. They can’t harass, abuse, or deceive anyone they contact. It’s illegal for them to falsely state that you’re required to pay from your own assets.
You have the right to send a cease communication letter telling collectors not to contact you further. But this won’t make the debt disappear if you’re legally obligated to pay.
Tips for Dealing With Credit Card Debt of Someone Who Died
If collectors start calling about a deceased relative’s credit card debt, here are some tips:
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Consult an attorney. Get guidance from an estate planning, probate, or consumer protection attorney about your responsibilities.
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Check state laws. The laws in community property states create exceptions for surviving spouses. Understand how this could impact you.
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Notify credit bureaus. Inform the major credit bureaus about the death so the credit report is updated.
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Prioritize estate debts. Pay critical bills like mortgages first when settling estate debts in probate court.
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Don’t make payments right away. Avoid paying from your own pocket until you confirm whether you’re liable.
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Request debt validation. Collectors must prove the deceased person actually owed the debt. Ask for verification.
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Report harassment. If collectors cross the line, submit complaints to the Consumer Financial Protection Bureau.
Losing someone you care about is hard enough without collections calls about their unpaid credit card bills. But in most cases, relatives don’t inherit credit card debt. Know your rights and consult an attorney so creditors deal with the estate, not you.
Key Takeaways
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When someone dies, their estate is responsible for repaying credit card debt. Relatives typically don’t have to pay from their own money.
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Exceptions include joint account holders, authorized users, co-signers, and surviving spouses in community property states.
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Debt collectors can contact certain relatives but can’t suggest they are personally responsible for repaying credit card debt.
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Notify credit bureaus, validate debts, understand state laws, and work with an attorney when faced with collections calls.
Organize all financial documentation
If you’re the executor of an estate, you should start by organizing the person’s financial accounts. Court-certified representatives and surviving spouses can also request copies of the deceased’s credit reports, which list all accounts in that person’s name.
A Pennsylvania-based lawyer named Linda Kerns says, “People can be on a credit card and not even know it.” “Maybe when they filled out the credit card applications, [the joint cardholder] didn’t even tell them. ”.
These accounts can show up years later at the time of a death or divorce.
“I tell people to check their credit card reports regularly,” Kerns advises. “Resolve it before a death or divorce or traumatic event. ”.
Notify credit card companies of the death
After you’ve collected the person’s financial accounts, contact each card issuer and request to cancel the accounts. For joint credit cards, you’ll want to notify the issuer that a joint cardholder has died. In both cases, you’ll need to act quickly to avoid interest and finance charges.
Also, check each credit card account to see if any automatic or recurring charges were set up. If they were, cancel or move them to another card right away, like those for phone or utility bills.
Start by calling the number on the back of the card to let them know of the situation. A representative can flag the account and provide the address to which you’ll need to send an official notification letter and supporting documentation, including an official death certificate. Send any documentation by certified mail and save your receipt.
Do You Have to Pay Off Credit Cards of the Deceased?
FAQ
Is credit card debt forgiven upon death?
No, credit card debt is not typically forgiven upon death. Instead, it becomes the responsibility of the deceased person’s estate.
Do I have to pay my deceased father’s credit card debt?
If the estate doesn’t have enough money to pay all debts, the deceased’s credit card debt may go unpaid. In this case, surviving family members aren’t responsible for the debt unless they have a joint account, cosigned for the loan, or are otherwise legally responsible under state law.
Does the executor have to pay credit card debt?
Credit card debt survives beyond the grave and typically must be paid off by the deceased’s estate. It is the executor’s responsibility to help pay off those debts where possible. The impact of these payoffs will, in most cases, be most keenly felt by the beneficiaries of the estate.
Does your family have to pay credit card debt when you die?
Who is responsible for paying off debt after death? The executor of the deceased person’s estate is responsible for paying off any debts before distributing other funds or assets to heirs. In fact, the executor can become legally liable for some debt if proper procedures are not followed.