Credit Card Debt and the Death of a Spouse

All credit cards must come with written agreements that detail the terms.

While the death of a spouse is a difficult and trying emotional time, it also brings up financial concerns that can be hard to deal with. If your spouse dies leaving behind credit card debts, what happens to those debts depends largely on the kind of credit card agreement your spouse had and the state in which you live. Talk to an attorney if you need legal advice about credit card debts after the death of a spouse.

Types of Credit Card Accounts

What happens to your spouse's credit card is largely dependent on the terms of the credit agreement. If, for example, you and your spouse have a joint credit card account, you remain responsible for the debt after your spouse dies because the account is in both of your names. However, if your spouse was the only account holder, the credit card company can only go after any of your spouse's estate assets to satisfy an outstanding debt. The company cannot hold you responsible for the debt.

Unsecured Debts

Credit cards are, usually, unsecured forms of credit, meaning the credit card company does not take a security interest (collateral) in any of the debtor's property. Unlike, for example, a car loan, a credit card company cannot repossess a car if the debtor fails to pay back the loan. If your spouse did not have enough money to pay back all debts, known as insolvency, credit card companies are generally not going to be able to recover the debt.

Probate

When your spouse dies, all her property must get redistributed according to the probate laws of your state. This property, known as an estate, is the collection of all the debts and assets she owned individually. As part of the probate process, a person, called an executor or representative, accounts for all the estate property and debts. Once accounted for, the executor then starts paying off debts using estate property.

Community Property States

While the general rule is that you are not responsible for debts your spouse acquired by himself, you may be responsible if you live in a state that has "community property" laws. As of February 2011, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states, meaning they consider all assets and debts owned by either party during a marriage as being owned by both spouses. In these states, a credit card company might be able to come after a spouse for a card debt even if the spouse did not enter the credit agreement.

References

• Consumer Credit Counseling Services: Managing Debt Following the Death of a Spouse
• Federal Trade Commission: Debt Collection FAQs: A Guide for Consumers
• Privacy Matters: Deceased Spouse Debt: Who is Responsible?