Do Heirs Have to Pay Credit Card Debt

5 June, 2016

I came across an article last week on Bankrate.com that caught my eye.  It discussed credit card debt and just what happens if the cardholder dies while there is still a balance on his/her account(s).  Credit card debt always comes up during client meetings…so I thought I’d pass along the highlights of the article so you can keep it in the back of your mind.

First of all, if someone in your family passes away and there aren’t enough assets in their estate to pay off all the plastic, you will not be on the hook to pay the bills.  Credit card debt is unsecured, so there’s no mortgage to foreclose or car to repossess.  The credit card companies will be notified of your loved one’s passing by the Probate Court and that means they’ll certainly be looking to collect dough from someone.  If the card(s) were only in the deceased’s name, then Capital One (or whomever) will just be out of luck.  They may try coming after other family members, just to be jerks.  But now you know you can tell them to go pound sound. 

If any of the credit cards were jointly held, typically both spouses, then the surviving spouse will have to pay off the remainder of the account(s).  I’d recommend you think twice about getting a joint card.  Even if you’re trying to help one of your kids to establish good credit, it still may turn out to be a risky proposition once Junior gets out in the real world and starts charging up a storm.   It DOES happen.  A lot.

If you live in a community property state, the laws can be different.  Make sure you understand what they are so you can protect yourself and your family.  And obviously, a decedent’s estate will be used to pay off credit cards and all other debts.  That means there will be less dough for the heirs.  So, the bottom line, I think, is to keep fighting to keep your credit card debt in check.  Too much debt is bad when you’re alive and even worse if you’re not.  Good luck.   Until next time, here’s to good planning!


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