What happens to the credit card debt once a person is deceased?

Question

What happens to the credit card debt once a person is deceased?

Answer 1

It becomes a debt to the estate of the deceased.  So if there are assets in the estate (i.e. a house)  the debt must be settled out of the assets before the estate can close.  If there are no assets with which to pay the debt, the credit card companies lose out.  However, that has never stopped them from trying to contact relatives (heirs) to try to guilt them into paying off the debt.  Relatives are absolutely not responsible for the debt of an estate.

Answer 2

There has to be someone in charge of the 'estate'...an 'executor of the will' that is responsible for collecting debts due the deceased and paying bills owed by the deceased.

It is up to them to contact all the credit cards and bank accounts, find out what balances are due, and what money is in the accounts. ALSO they should be asking about any insurance policies on those cards and accounts-so that claims can be made to the insurance providers to pay off balance due, etc.

Some banks automatically have 'death insurance' on bank accounts so there may some additional money due to the 'estate' to use for paying bills and/or dividing among the heirs.

If there is no living relative responsible for the deceased, no insurance, no money in the bank, or property to be sold-the credit cards have to be notified with a copy of the death certificate and then they have to write it off.

Answer 3

the estate has to pay to the extent it can --if not the estate is declared bankrupt and it goes away as a lose to the company

Answer 4

Assuming there was no co-signer, the creditors will make a claim on the probate, and the estate would be responsible for paying the deceased one's debts.

If there is little or no estate, the debt should be written off as a loss. HOWEVER, many sleazy creditors and collection agencies will try to pressure or deceive the relatives or heirs into believing they are responsible for paying.

Do not let this happen to you!

Answer 5

Whenever someone dies and leaves debts behind, a designated person (called an executor or administrator) handles the estate. If the deceased person did not have a will and was married, then, in many states the spouse automatically assumes responsibility for the estate and, becomes responsible for paying off the debts on his or her own. If the deceased person did not have a will and did not have a living spouse, then usually a close relative (son, daughter, mother, father, or a grandparent) is appointed as the executor of the estate according to state law. If there are no relatives, the state appoints an executor.

Even when an estate is worthless, the executor must still notify all creditors of the death. Debts from a worthless estate are generally charged off and no future collection actions are taken. However, as stated earlier, in some states a living spouse can still be held responsible for paying off the debts of their deceased spouse.

Always check your state laws and always consult with a probate attorney.

When the estate is worth something, the debts must be satisfied according to federal and state priority. For instance, debts owed to the federal government take first priority and then state governments debts and after that, it depends on the types of debts and whether or not there is a will. Assuming there is a will, its instructions are followed and then comes secured debts, liens, judgments and finally unsecured debts.

Closing out an estate when debts remain can become very complicated very quickly! There are specific federal and state rules and procedures that must be followed. It's always best to consult an attorney well versed in estate law.

Hope this answers your question

LEGAL DISCLAIMER:  The advice contained herein is for informational purposes only.  It is not to be construed as Legal Counsel nor Legal Advice.

Answer 6

The estate pays the debt before any inheritance is given out to the heirs.

If he owns more than he owes, then enough stuff is sold to pay off the debts, and then the rest goes to the kids (or whoever he designated in his will).

if he owes more than he owns, then everything is sold to pay off the debts.  What's left over (the unpaid debts) are then cancelled (the credit card company eats the difference)

UNDER NO CIRCUMSTANCES are the kids liable for the father's debt.  Do not let a collector try to convince you otherwise (they'll try)

Answer 7

if he/she had a spouse then it becomes their problem. if they had family then it becomes next of kins problem. if they had nobody then the debt is absorbed by the lender.

I'm sure people have ignored it once the credit card companies start calling looking for payment but it should be repaid.