When A Person Dies Is Their Estate Responsible For Their Credit Card Debt?


When a person passes away, the probate courts in their state immediately start putting together that person’s estate. The estate is all of the assets and debts the person has, as well as any life insurance or anything else that needs to be distributed. If there is a will, then the probate court will use that will to assign an executor of the estate who is responsible for taking care of the estate’s final arrangements based on guidance from the court. If there is no will, then the court will assign an executor but most of what the executor does is based on state laws.

Debt Of The Deceased

The estate that the probate court sets up becomes responsible for the deceased person’s debts. Any assets of the estate must be liquidated to pay off the estate’s debts before anyone mentioned in the will can get their inheritance. Once all debts have been satisfied, then the remaining assets can be turned over to beneficiaries from the will.

Life Insurance

One way that people make sure there is enough money to cover all of their final debts and still leave something for their beneficiaries is to get life insurance. For example, a husband would get a life insurance policy that carries enough death benefit for his wife to pay off the mortgage if he passes away and keep the family house.

What About Credit Card Debt?

A credit card account can either have only one owner, or it can have co-owners. If the owner of the account passes away, then the assets of the estate might be used to pay off the balance. If there is a co-owner of the account, then the co-owner would be responsible for paying any balance that remains.

Do All Credit Card Balances Get Paid?

The probate court and the executor work together to determine the priority list of debts of the estate that must be paid. Credit cards are usually placed near the bottom of those lists. If there are no assets left in the estate when it comes time to pay the credit cards, then the credit card companies would have write-off any unpaid balance of accounts owned only by the deceased as a loss.

If there are balances left on accounts that have co-owners, then the co-owners become responsible for those balances. The credit card companies can use any collection methods they want to get co-owners of credit card accounts to pay back complete balances.

When a person passes away, the probate court in their state will work with the estate executor to determine which estate debts should be paid first. Credit card debt is usually put at the bottom of those lists, and that means that credit card companies could be out of luck for accounts solely owned by the deceased. But if there is a co-owner on those accounts, then the credit card companies have someone to try and collect their money from.