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What Happens to Credit Card Debt When You Die?
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Aug 2010
If you're like millions of Americans, you have credit card debt—and you may wonder what will happen to the debt upon your demise. Essentially there are two main factors that will determine who is responsible for your credit card debt after you die: whose name or names are on the account and where you live.
Whose name is on the account?
If the card is only in your name, your estate is responsible for the debt. As the estate goes through probate, the executor or administrator of the estate will make a determination of the assets and debts of the estate and pay off debts in the order that state law requires. If assets remain after that, they will be distributed to heirs according to your will or, if you don't have a will, state law.
Remember that not all assets go through probate, however; things like insurance proceeds, IRAs, and 401(k)s usually go to beneficiaries without being counted as assets in the estate; accordingly, beneficiaries receive those regardless of debts, and an executor or administrator of an estate can't use them to pay off credit card debt.
If you share your credit card account with someone else, i.e., someone else also signed the application, that person could be held responsible for the debt; if there is another person listed on the account but only as an authorized user, they will not be responsible for the debt. An authorized user is generally someone who can use the card but didn't sign the application and doesn't pay the bills.
What happens if the estate's assets don't cover the debt?
If your estate is solely responsible for the debt and there isn't enough money in your estate to cover it, the debt ends there. The credit card company has to write it off, and neither your heirs nor anyone else can be held responsible for it.
What about community property states?
One caveat to all of above information comes in so-called "community property" states, in which assets, and sometimes debts, accumulated throughout a marriage are considered marital or joint property. States that have community property rules are Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington, but provisions vary regarding debts, so be sure to inform yourself of your specific state law on the issue.
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Comments
Submitted by on Jul 26, 2010 - 12:18PM
I have been told something totally different by a lawyer in Ventura regarding credit card debt. I was told that even if someone dies the card with their name on it is not the heirs responsiblity. I have also been told by a credit card company that if the card is not in my name I am not responsible for my mother's debt. In California the debt is neither your responsiblity if you are divorce and the card was in your spouses name as well as a parent who charged up debt. The card is not in my name and there will be no money anyway to pay off my parents debt.
Submitted by on Jul 28, 2010 - 8:18AM
If a credit card debt is unsecured, why does the estate or anyone have to pay it off if the holder of the card dies?
Submitted by on Mar 9, 2011 - 4:11PM
I see no difference in what both of you said . The debt will be subtracted from the hiers inhiertance . If there is no estate the hiers pay nothing . No need to get another lawyer , as they are the biggest reason there is no inhiertance
Submitted by on Jul 27, 2010 - 12:51PM
It is my understanding that in Arizona if a credit card was taken out by a person (as a single person) before they were married the debt is not the spouse's. If they get a card after marriage the community property rule applies.
Submitted by on Jul 27, 2010 - 4:45PM
MY MOM IS 94 YRS OLD AND HAS ONLY ALITTLE MONEY AND TWO LIFE POLICY OBTAINING TO NOT MUCH ENOUGH TO BURRY HERE SHE HAS A CREDIT CARD WITH ABOUT $1000.00 ONLY IN HER NAME .
CAN THEY FIND OUT OF HER LIFE INS POLICYS SHE LIVES IN FLA
THANK YOU DIANE
Submitted by on Jul 28, 2010 - 10:37PM
I am 85 years old and haea credit card with the Bank of Ameerica with a $13,000.00 limit. However I keep it down very low. My name is the onlly name on it. Even my wife cannot sign to make a purchase with it. We own our home free and clear but it is in my wife's name only. My name is not on anything that we own. Not even the car. So what will happen if I owe 2 o 3 hundred dollars on the card when I die?
Submitted by on Jul 30, 2010 - 7:33PM
How are rental properties devided up in a community property State in a no contest divorce? Also wondering if you can remove a spouce from a home loan that has always been sole and separate. 7 year marriage comunity property state.
Submitted by on Aug 10, 2010 - 11:33AM
Thanks for your inquiry. Just a reminder: LegalZoom makes it easy and affordable to create your own legal document, but we don't give specific legal advice. We can help you find an attorney with our attorney referral network: http://attorneyconnect.legalzoom.com
Submitted by on Dec 7, 2011 - 9:17PM
Your wsebtie has to be the electronic Swiss army knife for this topic.
Submitted by on Aug 9, 2010 - 5:44PM
I would like to ask,if I leave an annuity to someone,that was for my pain and suffering,can the state take it away for any reason?
Submitted by on Aug 11, 2010 - 12:27PM
Hi, and thanks for your question. Just a reminder, though, that our specialty is legal documents, not legal advice. Although we can't answer your question directly, we can certainly help you find a lawyer who can! Check out our attorney referral network: http://attorneyconnect.legalzoom.com
Submitted by on Sep 6, 2010 - 12:18PM
I have loaned my son a large amount of money. We would like to draw up a document for repay from his estate if he should pass away before it is paid. What kind of document is needed and is a notary signature sufficient.
Submitted by on Feb 2, 2011 - 12:48AM
Jump on this delayed horse...quickly! Doesn't have to be dressage...just let's get it done NOW !
Love,
Bear
Submitted by on Aug 17, 2011 - 11:20AM
My father is terminaly ill and is legally married and living with my mother. But he has seen an attorney and drawn up a will that has his son from a previous marriage as his power of attorney and executor of his estate. He stated in his will that he is not married. My parents live in Arizona and I am concerned that my mother will be left with his credit card debt and nothing from his life insurance or pension. They are legally married for 15+ years,living together, file taxes together and so on. What advice can you give me?
Submitted by on Oct 10, 2011 - 9:55AM
Hi, thank so much for your inquiry. We are so sorry to hear of the situation you are facing, however as LegalZoom is not a law firm we are unable to provide legal advice regarding your situation. However, you can get free legal advice on the LegalZoom Facebook page every Friday and Tuesday. Check out Free Joe: http://zoo.mn/FreeJoe.
Submitted by on Nov 6, 2011 - 10:18AM
I am divorced, age 65,still have a $70,000 mortgage on my home. I have a will...However, I have about $12,000 in credit card debt...My credit score is perfect, however, my health is not good. I have 2 children...no life insurance, and if I die, will my children be responsible for paying my credit card debt? I am trying to pay it down slowly, but living on social security is hard..I am also disabled. There is equity in my home. So, what will happen if I leave credit card debt when I die? Who has to pay for it? The cards are only in my name..thank you!
Submitted by on Nov 10, 2011 - 8:34AM
We live in TX. My mom passed about 8 yrs ago. Neither my brother nor I ever probated her property. I was told that since it has been soo many yrs. that I don't have to now
because of the length of time she's been gone. That there is a form we can fill out and have property placed in our name?
Submitted by on Mar 11, 2012 - 5:33PM
My mother died without a will. We both were on the deed to the house - joint tenancy. A collection agency is pursuing me for my unpaid credit card ($13,000.00), due to the fact I'm unemployed. Though I am seeking employment. Can the collection agency take me to probate court? thank you,
Submitted by on May 9, 2012 - 10:20AM
Hi Kathie - Thanks for contacting LegalZoom. While we make creating legal documents easy and affordable, we unfortunately cannot give specific legal advice on this matter. Feel free to get free legal advice on the LegalZoom Facebook page every Tuesday and Friday. Check out Free Joe: http://zoo.mn/FreeJoe.
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