How Death Affects Credit Card Debts

Few people don't have at least one credit card in their wallet. When a person passes away, loved ones left behind may be puzzled as to how to handle balances on credit cards. Read on and find out more about how credit card debts are affected by death.

Probate and Debts of the Deceased

Unless your loved one has very little debt and property, the estate will have to go through probate. In case you were wondering, the word estate sounds grand but just means the property and debts of the deceased. Estates can be large or small, and the size influences how long probate will take. Not only are debts and property the purview of the probate court, but the leadership of the process matters too. A personal representative (or executor) is appointed or approved of by the probate court. This person may be a close relative, friend, or a family attorney of the deceased. A large part of a personal representative's duties is seeing to it that bills, like credit card bills, are handled.

Who Is Responsible for Paying Credit Card Bills?

Some loved ones who want to do the right thing mistakenly take out their checkbooks and pay credit card bills belonging to the deceased. Though they mean well, that is not necessary. While credit cards should be paid, in some instances, they should be paid from the estate and not from loved ones' personal accounts. Here's how it works:

  1. Once a death certificate becomes available, the personal representative contacts each creditor and informs them of the death of the account holder.
  2. All credit card interest, late fees, penalties, and other extra charges will cease immediately.
  3. Once the card issuer has been informed, the personal representative will wait for them to respond with a balance due on the account.
  4. The account issuer has only a certain amount of time to respond, and they must respond before probate is closed.
  5. The funds to pay the credit card balance should come from the deceased's bank account.

The above assumes the deceased held a single account credit card and not a joint account.

What Else to Know About These Debts

Probate must approve of all bills paid, and that includes credit card bills. All debts of the deceased are assigned a priority level. Most important, as far as probate is concerned, are tax debts. After that comes debts associated with property, such as mortgages and auto loans. Credit card debt often comes so far down the list that they never get paid. That should not be considered a problem, however. Card issuers cannot sue the estate for unpaid credit card balances or take any punitive actions against the estate or beneficiaries.

To learn more about this form of debt and probate, speak to your probate lawyer.