What Happens to Credit Card Debt When You Die?

Does Credit Card Debt Die With You?

Credit card debt doesn't disappear when you die. Any outstanding debt is usually paid from your estate. Your estate consists of the assets you owned at death, such as your home, car, bank accounts, investments, retirement accounts and other valuables. Typically, your debts must be paid before any of your remaining assets go to your heirs or surviving spouse.

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Who Is Responsible for Credit Card Debt When You Die?

When you die, the executor of your estate is responsible for using your assets to pay your outstanding debts. The executor may be a person you named in your will or estate plan. If you didn't have a will or estate plan, a probate court will appoint an executor.

If your estate doesn't have enough assets to pay your debt, the estate is considered insolvent. In this case, family members may have to pay your credit card debt in certain situations.

Joint Account Holders

A joint account holder on your credit cards can be held responsible for the debt after you die. Joint account holders apply for credit cards together as cosigners or co-borrowers, and are both equally responsible for paying the credit card balance.

Few major credit card companies offer joint accounts. If you and a family member share a credit card account, one of you is probably an authorized user on the other's account. Check with the credit card issuer to confirm this.

Authorized Users

An authorized user on a credit card account gets their own credit card and can use it for purchases. However, the primary cardholder is responsible for paying the bill. As a result, authorized users typically aren't responsible for credit card debt after the primary cardholder dies.

Learn more: Credit Card Authorized User vs. Cosigner: What Is the Difference?

Is a Spouse Responsible for Credit Card Debt?

You may have to pay your spouse's credit card debts after their death if you live in a community property state. Community property states typically hold spouses responsible for each other's debts, so you may be on the hook for credit card bills even if you were only an authorized user, the credit card was solely in your spouse's name or you didn't know about the debt.

There are nine community property states:

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

In California, Nevada and Washington, community property laws apply to domestic partners as well as spouses.

There are also five states where spouses can choose to make some or all of their assets community property:

• Alaska
• Florida
• Kentucky
• South Dakota
• Tennessee

Laws can vary from one community property state to another. If you live in one of these states, ask an attorney experienced in estate law in your state what your responsibilities are.

Tip: If your estate can't pay all your debts, state law determines which creditors are paid first. Typically, secured loans such as mortgages take priority over unsecured loans such as credit cards. In many cases, unsecured debt will not get paid.

Learn more: How to Pay Off Credit Card Debt

Next Steps After a Cardholder Dies

If a relative or loved one passes away with outstanding credit card debt, take the following steps.

1. Stop using the person's credit cards if you are an authorized user. Using a credit card after the primary cardholder's death is considered fraud, even if you are an authorized user. (You can keep using cards on which you're a joint account holder.)
2. Make a list of the person's credit card accounts. If you're unsure which accounts the person had, their spouse or executor can request a copy of the deceased's credit report to check.
3. Notify credit card companies of the death. If the card was solely in the deceased's name, ask to close the account. For a joint credit card account, you'll generally have the option to close the account or keep it open in your name.
4. Notify consumer credit bureaus. Credit card companies will report the death to the credit bureaus, but not always right away. To safeguard against identity thieves applying for credit in your loved one's name, you can report the death to the three major consumer credit bureaus (Experian, TransUnion and Equifax) yourself.
5. Make timely payments on any joint credit card accounts. Even if you don't plan to keep using the card, a single late payment can damage your credit score and make it harder to get credit in the future. Consider setting up automatic minimum payments to ensure you don't miss a payment during this stressful time.
6. Don't make any payments on cards where you're an authorized user. Missing a payment won't affect your credit, but making a payment could be considered evidence that you're taking responsibility for the full balance. If you live in a community property state, an attorney can clarify whether you should pay the bill.

Tip: Having each spouse be the primary cardholder on at least one credit card ensures the surviving spouse isn't left without access to credit during a stressful time.

Learn more: Financial Steps to Take After the Death of a Spouse

Assets That Are Protected From Creditors

If a deceased family member's estate doesn't have enough money to pay their credit card debt, will you have to drain your retirement account or surrender a life insurance payout to cover it? Fortunately, the following types of assets are protected from creditors in the event of a death:

• Retirement accounts, including employer-sponsored 401(k) or 403(b) plans, solo 401(k) plans, SEP IRAs, SIMPLE IRAs or Roth IRAs
• Life insurance proceeds
• Assets held in a living trust
• Brokerage accounts
• Homes, depending on state law and how title to the property is held

Credit card companies may contact you after a loved one's death to get information such as how to contact the executor of the deceased's estate. If you're a surviving spouse, executor or other authorized representative of the estate, they can discuss the deceased's debt with you. However, creditors cannot legally ask you to pay credit card debts that aren't your responsibility. If you're unsure of your responsibilities, consult an attorney familiar with your state's estate laws.

Learn more: What Is a Living Trust?

The Bottom Line

Avoiding excessive credit card debt while you're alive can ensure your loved ones aren't burdened by outstanding bills after you die. Paying off your balances in full each month also keeps you from accruing credit card interest, which can snowball quickly.

There's a lot to deal with after the death of a loved one, but if a family member with whom you shared joint credit accounts dies, it's important to ensure your credit score isn't negatively affected. Consider signing up for free credit monitoring from Experian, which alerts you to important changes in your credit that could signal fraud. It's a convenient way to keep tabs on your credit during an emotionally trying time.