What Happens to Credit Card Debt When a Person Dies?

Many people die with debts. Many times, this leaves a hardship on the surviving family members. Some people make provisions for their credit card debt in case they die. Either way, dying with credit card debt leaves the surviving family with one more thing to worry about at a very stressful time.

Investment Assets

Assets like your 401k and IRAs are not attachable by creditors in case of your death. This is a federal regulation and does not vary from state to state. Life insurance is also usually exempt from creditors trying to collect a debt.

Probate

If you did not have an official will, your remaining assets may go through probate where an administrator lists your assets and your debts. Your assets are then used to pay off your debts. The remaining estate goes to your heirs.

Nothing

If you pass away with credit card debts in your name only, the credit card company often just takes the loss when there are not enough assets to pay the debt. The card company cannot legally force a family member to pay the debt unless it was a joint account.

Joint Accounts

When the credit card account is a joint account and one person dies, the surviving person on the account is still responsible for the debt. However, if the second person was merely an authorized user and signed no agreement, the debt is the deceased's alone.

Community Property

In some states, including Arizona, Idaho, Texas and others, the law considers any debt accumulated during a marriage to be the responsibility of the husband and the wife. If either spouse dies, it is possible for the debt to pass on to the surviving spouse.