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When a person leaves credit card debt after death, there are a few things that could happen. The debt will be the responsibility of the deceased's estate, but if the estate can't pay it off, then a cosigner or surviving spouse could be responsible. Or, the credit card company may need to write off the debt entirely. Sorting out a loved one's financial accounts after they pass can be complicated, especially if there's debt involved. If you're managing a deceased family member's credit card debt, read this guide to find out how it works. What happens to credit card debt after death?When a person dies, their estate is legally required to pay their debts, including credit card debt. An estate is all the money and property a person owns. The person who is in charge of managing the estate, known as either the executor or administrator, pays credit card debt using the estate's assets during a process called probate. For a straightforward example, let's say that a person dies with $25,000 in the bank and $5,000 on their credit cards. The executor of the estate would use $5,000 from that bank account to pay the credit card companies. If there were no other debts, the remaining $20,000 would go to the deceased's beneficiaries (the recipients of a deceased person's assets). It can be more complex depending on the assets and debts a person leaves behind. Some assets, such as life insurance policies, aren't used to pay an estate's debt. These are paid directly to a beneficiary as part of the insurance contract. If the deceased had multiple types of debt owed to different creditors, then they're typically repaid in the following order:
What if the estate can't pay the deceased person's credit card debt?Some estates don't have the assets to pay off credit card debt. In that case, what happens to the debt depends on whether anyone else is legally responsible for it. Here are the two situations where you can inherit credit card debt:
If either of the above applies to you, then you'd be legally required to pay off what's owed. For large balances, you may want to spend some time reviewing the best ways to eliminate credit card debt. This can help you find the right debt repayment method. Learn more: How to Get Out of Credit Card Debt Authorized users on a credit card account aren't responsible for unpaid debt when the primary account holder dies. It's also worth noting that they aren't allowed to continue using the account. Using a deceased person's credit card account, including as an authorized user, is considered credit card fraud. If no one else is legally responsible for the credit card debt and the estate can't pay it, then the creditors will need to write it off. How to handle a deceased person's credit card accountsGetting a deceased person's financial accounts in order is the responsibility of the estate's executor or administrator. This person is named in the will, but if there was no will, then the court will appoint someone to the position. It can be difficult when you're responsible for managing credit card accounts of someone who has passed away. Here are a few steps that can help make it easier for you. 1. Make a list of the deceased person's credit cardsThe first step is to get organized by listing all the deceased person's credit cards. It's also a good idea to list and, if possible, access their other financial accounts at this time. Since you'll need to pay credit cards from the estate, it helps to know what assets the estate has available. 2. Don't use or let anyone else use those credit card accountsOnce a person dies, it's fraud to use their credit card account, including for authorized users. The only exception is a joint credit card account. If you and the deceased were joint account holders on a credit card, you can continue using it. Other than that, make sure not to use the deceased person's credit cards at all. If there were any authorized users, tell them to destroy or return their cards tied to the account. 3. Notify the credit card issuersContact the card issuers for all the deceased person's credit cards. You can find the phone number on the back of each card. When you call, a representative can flag the account and explain the process for closing the credit card. Credit card companies usually require that you send them a copy of the cardholder's death certificate to close the account. This is also when you can discuss paying off the balances on those credit cards. Or, if the deceased's assets won't be enough to cover it, you could possibly negotiate credit card debt with the card issuer. 4. Notify the credit bureausContact the three consumer credit bureaus: Equifax, Experian, and TransUnion. It's important that they know about the death so they can note it on the deceased person's credit file. This prevents identity theft because no one will be able to open new credit accounts in the deceased's name. Dealing with debt collectorsIf the deceased had outstanding debt, you could be contacted by a debt collector. Even though debts are supposed to be paid by the estate in order, it's not unheard of for debt collectors to try cutting the line. It's best to leave repayment to the executor of the estate. If you're the executor and you're unsure of what to do, consulting with an estate attorney can help. Keep in mind that you don't need to talk to debt collectors. The Fair Debt Collection Practices Act gives you the right to request in writing that a debt collector stop contacting you. Once it receives your letter requesting this, the debt collector can only contact you to confirm that it will stop going forward and to tell you that it's taking specific action, such as a lawsuit. Managing the debt of a loved one after they pass can be emotionally and financially difficult. Hopefully, knowing more about what to expect -- and what you may or may not be responsible for -- can help make the process a little easier. RELATED: How Much Life Insurance Do You Need? FAQs
Do I have to pay my deceased husband's credit card debt?You are not responsible for someone else's debt. When someone dies with an unpaid debt, if the debt needs to be paid, it should be paid from any money or property they left behind according to state law. This is often called their estate.
What happens if someone dies with a lot of credit card debt?Credit card balances are typically paid for by the deceased's estate, which is everything that they owned at the time of death.
What debts are forgiven at death?What debt is forgiven when you die? Most debts have to be paid through your estate in the event of death. However, federal student loan debts and some private student loan debts may be forgiven if the primary borrower dies.
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