The loss of a loved one is never easy. With so much to take care of, you may not want to tackle closing out their accounts, especially if there’s still debt on their credit cards. However, knowing the process for handling someone’s credit card debt may help lighten the load and provide some clarity during this stressful time. Here are the basics of what happens to credit card debt after someone dies.
Does my credit card debt die with me?
The short answer is no. Credit card debt continues to exist after you die. What happens to that debt depends on your estate, meaning whatever money and assets you’ve left behind.
What happens to credit card debt if there’s an estate
If someone leaves behind assets like a bank account, a home, a car or stocks and bonds when they die, those assets may be used to pay off credit card debt. Generally, creditors are paid before any beneficiaries named in the will.
An estate’s executor — whether named in a will or appointed by a court — is responsible for using the estate’s assets to pay off any outstanding debt.
What happens to credit card debt if there’s no estate
If there is no estate or the estate is insolvent — meaning, if the amount someone owed in debt is greater than their assets were worth — the credit card debt might not be paid at all.
A surviving family member can usually only be held responsible for credit card debt if they were a co-signer of the credit card account, a joint account holder or a spouse living in a community property state, and the debt was incurred while they were married.
When are you responsible for someone else’s credit card debt?
Generally, the surviving members of the family are not responsible for the deceased’s outstanding credit card debt. The only situations in which you’d usually be responsible for someone else’s debt are if you share a joint account or if you co-signed their card. In these cases, you’re still responsible for paying off debt if the cardmember dies.
However, some states have community property laws, meaning that certain property and assets a married person owns are also owned equally by their spouse. These states include:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
If you live in one of these states and your spouse incurred credit card debt while you were married, you may be responsible for repaying this debt after they pass away.
What to do after a cardmember dies
If you’re feeling overwhelmed after someone passes away, here are some simple financial steps you can take to ease the administrative burden:
- Gather financial documents: If you’re the deceased’s spouse, executor of their estate or court-certified representative, request a copy of their credit report. A credit report will list all accounts in their name, which can help you track down anything, including credit cards, you may not know about.
- Contact the credit card company: Call the number on the back of the deceased’s card to let the company know they’ve passed. You may need to send a copy of the death certificate for the account to be canceled.
- Stop using the credit card: If the card has other authorized users, make sure they don’t use it after the cardmember’s death. Since a card is no longer valid after the cardmember’s death, this activity might be flagged as fraud.
- Cancel or transfer recurring payments: If the card is being used to automatically pay bills or subscriptions, transfer them to another account or cancel over the phone or online.
- Consider contacting the credit bureaus to request a credit freeze: This will prevent anyone from opening a new account using your loved one’s name or Social Security number.
Prepare for the future
Understanding what happens to credit card debt after you die can help you avoid any unforeseen surprises. Speak with a lawyer to understand how property will be distributed and what your loved ones can expect when it comes to paying off credit card debt. By staying on top of your finances, you can make the process as smooth as possible.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
