What Happens to Credit Card Debt When You Die?

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What happens to you after you die? No one knows for certain—but one thing's for sure: You won't have to worry about paying your bills anymore. For your survivors, it's another story. Will they be responsible for paying off your credit card balances? In most cases, no. When you die, any credit card debt you owe is generally paid out of assets from your estate. Here's a closer look at what happens to credit card debt after a death and what survivors should do to ensure it's handled properly.

Who Is Responsible for Credit Card Debt When You Die?

When you die, any debt you leave behind must be paid before any assets are distributed to your heirs or surviving spouse. Debt is paid from your estate, which simply means the sum of all the assets you had at the time of your death. The executor of your estate uses the assets in your estate to pay your outstanding debts. The executor may be someone you named in your will or estate plan or, if you didn't have a will or estate plan, a person appointed by probate court.

If you have more debts than you have assets, your estate is insolvent. Whether family members must pay your credit card debt in this case depends on several factors.

Anyone who is 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; the credit card company checks both applicants' credit reports when deciding whether to issue credit. Both account holders are equally responsible for paying the credit card balance.

Few major credit card companies offer joint accounts these days. If you share a credit card account with your deceased spouse, it's more likely that one of you is an authorized user on the other's account. (Check with the credit card issuer if you're unsure which category you fall into.)

As an authorized user, you receive a credit card in your name for the account and can make purchases and payments on the card. However, the primary account holder is ultimately responsible for paying the credit card balance. If you're an authorized user on the account of a deceased person, you generally aren't required to take care of the outstanding balance.

There's one key exception, however: Community property states typically hold spouses responsible for each other's debts. If you live in a community property state, you may have to pay your spouse's credit card debts after their death, even if you were only an authorized user or the credit card was solely in their name. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states, and Alaska gives spouses the option to make their property community. Laws can vary from one community property state to another, so if you live in one of these states, ask an attorney with expertise in estate law in your state what your responsibilities are.

Next Steps After a Cardholder Dies

When a relative or loved one passes away with existing credit card debt, take the following steps to ensure the debt is handled properly.

  1. Stop using credit cards on which you are an authorized user. (You can keep using credit cards on which you are a joint account holder.) Using a credit card after the primary cardholder's death is considered fraud, even if you are an authorized user. That's why it's a good idea for each spouse to be the primary cardholder on at least one credit card.
  2. Make a list of the person's credit card accounts. If you aren't sure which accounts the person had, the spouse or executor of the deceased can request a copy of the person's credit report to check.
  3. Notify the credit card companies of the death. If the card was solely in the deceased's name, you should ask to close the account. If you have a joint credit card account, tell the credit card issuer that one account holder is now deceased. You'll generally have the option to close the account or keep it open in your name only; however, the terms of the credit card agreement, such as the annual percentage rate, may change once you are the sole account holder.
  4. Notify the three consumer credit bureaus. Credit card companies will report the death to the credit bureaus, but it may not happen immediately. If you don't want to wait, you can report the death to the three major consumer credit bureaus (Experian, TransUnion and Equifax) yourself. This can help ensure that identity thieves don't apply for credit in the deceased's name.
    The reporting process may differ slightly for each credit bureau. In general, however, you'll need to supply a copy of the death certificate and the deceased's Social Security number. Unless you are the spouse of the deceased, you'll also need proof that you are the executor of the estate or otherwise authorized to act on the person's behalf.
  5. Make timely payments on any jointly held credit cards. Even if you don't plan to keep using the card, just one late payment can have a negative effect on your credit score, which may make it more difficult to get credit in your own name going forward. The death of a loved one is a stressful time, so to ensure you don't miss a payment, consider setting up automatic minimum payments on any joint credit accounts.

If you are an authorized user on a credit card held by the deceased, do not make any payments on that card. If you do so, the credit card company may legally be able to argue that you have taken responsibility for the entire balance. A missing payment will not reflect on your credit report, only on that of the primary cardholder. If you live in a community property state, consider asking an attorney to clarify whether you should or should not pay the bill.

Assets That Are Protected From Creditors

If you discover that a spouse or other relative's credit card debt was bigger than their estate, will you have to empty your bank account or hand over your spouse's life insurance to pay the credit card companies?

While debt such as mortgages and car loans is secured by collateral, credit cards are unsecured loans, which tend to fall at the bottom of the priority scale after a death. If your estate doesn't have enough money to pay all your debts, state law will determine which creditors are the highest priority. In many cases, unsecured debt will not get paid.

In addition, 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 survivors after a death to get information such as how to contact the executor of the deceased's estate. However, they cannot legally ask you to pay credit card debts that aren't your responsibility. If you're not sure what your responsibilities are, consult an attorney familiar with estate law in your state.

Credit Card Liability After Death

Keeping your credit card balances manageable while you're alive can ensure your credit card debt doesn't burden your survivors after you die. If a spouse or other family member with whom you had joint credit accounts dies, keep an eye on your credit score to make sure it isn't negatively affected as a result. Check your credit report and consider signing up for free credit monitoring to help you build and maintain a good credit score.