If I Die with Credit Card Debt Who Pays the Bill?

It is an unfortunate fact that many people die each day with one form or another of unpaid bills. One of the more common forms of debt is consumer debt or credit card debt. There was a period of time when getting a credit card was something everybody did. It was easy to get a card and the offers came so often in the mail that it was tempting to apply. Once it was received in the mail, it was treated like just another source of cash. Sure, you believed you would have time to pay off the balance later. Yet if you or a loved one passes away with credit card debt who has to pay?

If you were the sole holder of the card, and it wasn't some type of joint account, then the debt is entirely yours. At the same time, other circumstances or factors may complicate this simple statement, including who applied for the credit card and the state in which you reside. Also, if there happens to be a second cardholder but they are not contractually obligated to make payments but may use the credit card for charges (they are an authorized user), the same rule applies; they do not have to pay it off.

When somebody dies they have an estate that is, according to law, responsible for paying off any outstanding debts, including any payoff of credit card balances. In cases where your estate would go through probate, an executor would examine your assets and debts then consult established guidelines to pick which bills to pay first.

In situations where the credit card company falls last on the list of priorities set by probate laws or there simply isn't sufficient funds to repay the balance on the card, it may be forced to cancel the debt and take a loss. The card company should receive notice in the event a cardholders estate cannot pay and they write off that balance. There is no other recourse when the sole cardholder dies. Of course, there are definitely cases where those left behind must pay off the debt of their deceased loved one.
If your credit card debt was a shared or joint card account, it makes sense that the payments must been continued by the living cardholder. Whether it is your spouse, another family member, or whether there was a co-signer on a credit card for some other purpose, such as a business, then somebody else will have to pay the debt. Even if a portion of the debt can be reduced by using part of the deceased's estate, there is still some responsibility on the part of the living.

There are several states in the U.S. including Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin that have existing community property laws. What is community property? Well, basically it is a law, which says that any assets that are acquired in a marriage are considered joint property. More importantly, some states include debts in this definition. That means there may be a possibility that your spouse would be required to pay off your credit card debt--even if she isn't attached to the card.

Of course, even if you happen to live in a community property state, you should have some idea about how the laws might work in the case of your credit card debt. Conversely, your spouse should investigate the matter to find out what their obligations may be. It is possibly the debt could pass to your husband or wife, but then again, such cases will often be decided on an individual basis. That makes it important to know more about the laws.

Your family will have to manage your accounts following your death so it makes sense to have a plan. In cases where there is an executor, that person will be required to notify any creditors on outstanding debt. If your husband or wife is handling things directly, they should inform the credit card company immediately. Proof of death like a certified copy of your death certificate should be included in any messages sent to creditors.

After all other avenues are explored for eliminating or paying off the debt your loved one may elect to take over the credit card debt and start paying it themselves. This option may be closed to them if they have lousy credit. There is not always a clear-cut answer to how the debt may be paid off. Each situation is different and will require its own response in order to handle the credit card debt so there are no further problems.

August 28, 2012