Losing a loved one is never easy, and having to deal with something like their credit card debt when you're grieving is far from ideal. But knowing a few important things about credit card debt after death and who pays for credit card debt when you die might make things a bit easier during a difficult time.
What Happens to Credit Card Debt When You Die?
When someone dies, they leave behind an estate—everything they owned, including cash, property, insurance policies, trusts, business interests and other assets. What they might also leave behind is credit card debt, and it's up to the person responsible for their estate to deal with it. If the deceased had a will, that person is called the “executor.” If there’s no will, a court may appoint a personal representative or administrator to settle any debts.
Tips for Executors
If you’re the executor of a will, settling an estate can be stressful when the primary credit card holder dies. But it can be more manageable if you follow these steps to a less stressful process:
- First, obtain a copy of the will and seek out the advice of tax professionals and lawyers to help you avoid mistakes and make the process go smoother. Lawyers will be able to guide you when beneficiaries come forward requesting distribution of assets.
- Second, take stock of all assets. Documents that verify the value of said assets left behind by the deceased should be in a safe deposit box. Otherwise, finding an appraiser to help you verify the worth of assets could help. If this list of assets isn’t in a safe deposit box, the attorney who helped prepare the will may have a list of assets and their worth.
- Next, the estate is responsible for paying the debts of the deceased.
- Then, it’s important to settle debts and unpaid bills before letting family members take any assets they think they’re owed.
- Lastly, don’t rush the process. Take time to ensure creditors are paid, if you’re able, and all unpaid bills are up to date. Having an attorney guide you through the process and ensure that beneficiary disputes don’t arise could also be helpful.
How to Cancel Credit Cards After Death
When the primary credit card holder dies, as the executor of the estate, it’s your responsibility to notify all credit card companies to close the accounts to avoid additional interest charges. Ask to speak to the department for deceased accounts and request that any recurring charges be cancelled. This will flag the account.
To officially close the account, the executor of the estate must follow up in writing by sending a registered, certified letter. The credit card company will typically ask for a death certificate.
Then, the executor must notify the three credit report bureaus of the death of the account holder. The credit report must be flagged as “deceased” to prevent others from opening credit cards in the deceased person’s name.
Who pays for credit card debt when you die?
When the primary credit card holder dies, the estate is almost always responsible for paying off any debts, including credit card debts—not the executor or other immediate family members. If there's not enough to cover the debt, the executor or administrator may have to sell some of the deceased's belongings to cover the cost. If the estate can't raise the needed money, the debt typically goes unpaid.
Is credit card debt inherited?
There are some instances when you might be personally responsible for credit card debt after death. For instance, if you cosigned for a credit card account with the deceased, you may be responsible for repayment. The spouse of someone who dies may also be responsible for credit card debt if they reside in a community property state.
Family members typically are not obligated to pay the debts of a deceased relative from their own assets.
Authorized User on Credit Card After Death
When the primary credit card holder dies and you’re an authorized user on the account of the deceased, then you’re not responsible for the debt owed. Being an authorized user means you had access to make purchases with the card, but you’re not the primary owner of the account. When the primary account holder dies, you must stop using the card.
However, if you’re an authorized user and you continue making new purchases on the credit card after the primary account holder has passed, you could wind up on the hook for the entire balance, not just the balance you charged.
How do I legally protect myself?
If you're concerned about credit card debt a loved one's estate might owe, know there are laws in place for protection. The Federal Fair Debt Collection Practices Act (FDCPA) was designed to prohibit debt collectors from using abusive, unfair or deceptive practices to try to collect a debt.
A debt collector is allowed to contact the executor of the estate and communicate about the debt owed, however they’re not allowed to say that you’re responsible for paying the debt with your own assets unless you’re legally obligated, like if you were a cosigner or a joint accountholder.
If you want to make financial arrangements easier for your friends and family when your time comes, it's important to plan ahead. Consider seeking the help of an estate attorney or other financial advisor to help you put a plan in place to cover everything you leave behind—potential debt and assets alike. If you've recently lost someone and have questions about their debt, visit Capital One's deceased customer FAQ.