Credit Card Debt After Death
After a loved one or relative passes, their estate is typically responsible for paying off any debts they owed before death, including credit card debt. However, there may be some cases where a family member is responsible for their loved one’s debt in the event they shared a bank account with the deceased or are a surviving spouse in a community property state. If there is not enough money in the deceased’s account to pay off credit card debt and no one else co-signed for the debt, the creditors of these accounts may be out of luck.
Can Family Members Be Responsible for Debt After an Individual's Death?
This is generally not the case. The family members and loved ones of a deceased person are not usually obligated to use their own funds to pay for credit card debt after death. There could be exceptions to this rule though, such as if the deceased and a living family member shared a joint bank account.
Here are some exceptions when you may need to repay the debt:
- You co-signed a credit card account with the deceased person
- You had a joint credit card account with the deceased person
What Happens to Credit Card Debt After Death?
All assets, including money in the bank and debts the deceased owed, collectively form an estate. If the deceased person has debt, the executor of their estate will go through the probate process to handle these affairs. During the probate process, bills are paid off using the estate’s assets.
Typically, a family member of the deceased will be notified by any lenders, such as credit card companies, of their loved one’s death and any outstanding balances. It is important to note that a credit card issuer cannot tack on any more fees or penalties while the estate is being settled.
If the estate cannot cover the credit card debt, the company may need to write off this debt as a loss.
How to Deal with Credit Card Companies After Your Loved One Dies
It is never easy to handle credit card debt after a loved one passes, especially when debt collectors start contacting you. While credit card companies can contact you during this time, they also must adhere to certain rules established by the Federal Fair Debt Collection Practices Act (FDCPA).
A debt collector can contact a deceased’s individual’s spouse, parents, guardian, or the executor of their estate to discuss debts. If a debt collector has asked you to pay for the deceased’s debt outright, this is a tactic used to settle a debt and is not legal. You are also allowed to specify how you would like the debt collector to contact you in the future. It would also be beneficial to speak with a Springfield bankruptcy attorney to avoid any potential issues or opt to have the debt collector contact you through your lawyer.
For legal assistance regarding credit card debt, contact our Springfield bankruptcy attorneys online or at (417) 213-5006. Your initial consultation is free!