What Happens to Credit Card Debt When You Die?

By Janet Hutchins on Apr 29, 2011 | Filed in Personal Finance

One of the questions that many people ask has to do with credit card debt and death. What happens if your loved one racks up credit card debt? Are you going to have to pay it off? As her heir, will you become responsible for mom’s credit card balances when she passes on? As with all questions of law, it is usually a good idea to get some advice of a knowledgeable professional. But there are a few basic things to keep in mind when it comes to “ownership” of credit card debt:

Is Your Name on the Account?

When it comes to credit cards, you are responsible only if your name is on the account. (There might be some circumstances in which you are responsible for your spouse’s credit card debt, even if your name isn’t on the account, so check into that.) If a parent has run up credit card debt, and your name isn’t on the account, you aren’t accountable for it. Instead, it’s the estate that is responsible for it.

The Estate Pays the Debt

Basically, the estate is responsible for the debts of the deceased. If you are the executor of a will, you are responsible for seeing that the estate pays the debts. However, since credit card debt is unsecured, it is the last to be repaid. Funeral costs, secured debt and taxes are all paid before unsecured debt when someone passes away. So, while credit card debt could reduce your inheritance, you aren’t responsible for discharging it unless you are on the accounts.

Debt Collection Phone Calls

Credit card issuers are likely to try to get the money they are owed, and will probably contact you for payment. However, you can stand your ground. Unless you co-signed on the cards, and your name is on the account, you are not usually responsible. They might pester you, but you can ask them to stop contacting you over the phone about the debt. Find out your consumer rights, so you know how to respond in such cases.