Credit Card Debt after Death

Ever wonder what happens when a loved one has a lot of credit card debt and then dies? The debt does not just go away. So what does happen when there is debt left after a death?

When someone who has credit card debt dies the debt does not die with them. The debt is transferred to the estate to be paid off. What happens if the estate does not have enough in it to cover the debt? Often times the creditor is simply out of luck, they got all that they could.

There are exceptions to that however. If you co-signed for the credit card and are a joint card holder you will be responsible for the debt. Keep in mind there is a difference between an authorized user and a joint card holder. An authorized user is one that did not co-sign for the card; they are only authorized to use it. While you will be responsible for any and all remaining debt when you are a joint card holder, you will not be responsible for any debt if you are just an authorized card holder.

If you are an authorized user for a credit card do not continue to use it when the person whose name is on the card dies. This can actually have legal and criminal implications. That is also true if you know the debt will not be paid. If the card belongs to a parent and they are on their death bed, but you use it anyway knowing they will die soon and that you do not have the money to pay it off, you could be in big trouble. So if you are an authorized user on a credit card be careful when and how you use it.

What if you have a joint credit card and you get divorced and the spouse who agreed to pay the debt in the divorce dies before they pay it off? The other spouse is then responsible for the remaining debt. Their name is still on the card therefore they are still responsible for the remaining debt on the account.

As a beneficiary of the estate you will feel the effects of the remaining debt. You may not be responsible for it, but the debt will come out of the estate leaving you with less as a beneficiary. Creditors do have a time frame to file a claim against an estate for the debt owed. If they do not file the claim in time they may still try to get the money from remaining family members, so make sure you know whether or not you are liable for the debt so that if they contact you, you can let them know you are not liable and that they cannot call asking for the money again.

There are a lot of unknowns when someone dies. Knowing as much as you can will help you to deal with what happens next. Know what you are responsible for and know what the estate is responsible for. Know these things will help you keep from paying off a debt that is not your responsibility.

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