Who Pays Deceased Credit Card Debt?

In addition to the pain and shock of losing a loved one, survivors must often deal with another unpleasant reality: debt collectors. Although collection agents may insinuate that a survivor is personally responsible for paying these debts, this is often not the case. That said, creditors are able to make claims against the deceased's assets.

Individual Accounts

1. A credit card essentially works like a loan. Each time it is used, the card company gives money to a merchant on behalf of the cardholder. In exchange, the cardholder is billed and charged interest on the amount borrowed.
   
   
   
   If the card was issued only in the deceased's name, then he is the only person obligated to the credit card company. Thus, family members are not responsible for the balance of any card for which they did not apply.

Joint Accounts

2. If the deceased and his surviving spouse applied for any credit cards jointly, the surviving spouse is still liable for the balance of those joint accounts. However, being a joint account holder should not be confused with being an authorized user on one of the deceased's individual accounts. In the latter case, the spouse had no part in the application process. Rather, the agreement was only between the deceased and the lender; he simply chose to give his spouse access to his personal line of credit.

The Deceased's Estate

3. Immediately upon death, ownership of one's assets are temporarily transferred to a legal entity known as his estate. The deceased's creditors are then allowed to file claims against the assets held by his estate.
   
   
   
   State law assigns creditors priority based on the nature of their claims. In general, burial and funeral costs get paid first, followed by medical bills related to final illness, followed by probate fees and any death taxes. Next, unsecured debt such as credit card balances are paid with any remaining assets in the estate. If assets still remain after the unsecured debt is paid, they are then distributed to the heirs and beneficiaries according to the deceased's will.

Insolvent Estate

4. If the estate doesn't have sufficient assets to cover the deceased's credit card debt, then the remaining balance simply goes unpaid. The credit card company is not allowed to sue surviving family members for additional funds.

Fraud

5. It is illegal to use a credit card for which the deceased is the sole account holder. A clear example of this would be an identity thief stealing the deceased's credit card information and using it to make online purchases. A more subtle example would be authorized users such as the deceased's spouse and children making charges on the card even though their names were not on the account.

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