If you are getting older and you are still paying off credit card debt, you may be wondering what happens to credit card debt when you die. Perhaps you might also be wondering if you have a parent or grandparent that is getting older and still has some credit card debt and if you will be responsible for covering that debt. As a short summary, what happens to credit card debt when you die is that any remaining debt will be covered by the estate and if there happens to be more debt than the estate can cover, the credit card company is unable to recoup its losses.
First, if you have credit card debt when you die and there are no cosigners on the account, the debt is only yours. As a result, the assets of the state are supposed to cover any remaining debt. If there is not enough money, the credit card company has no other recourse, as the family cannot inherit debt. It can be possible for a spouse as a non-cosigner to inherit credit card debt in community property states like Alaska (opt-in), Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Second, there may also be a limit of what assets creditors can have access to. For example, accounts with a beneficiary typically cannot be considered assets that creditors can use to pay off the credit card debt of the deceased. Additionally, sometimes even a home may be safe from creditors in many states. If you find yourself as the family member of a deceased individual with credit card debt, it may be wise to consult with an attorney to see what assets a creditor has access to and what assets they cannot touch.
Finally, it is important to be very clear on what you are liable for and what you are not as a family member. Creditors can say anything on the phone, even information that may not be true. As an authorized user, you are not liable for someone else's debt, but a creditor may say that you are. It is essential to have a clear understanding of what responsibility you have (if any) to pay off a deceased family member's credit card debt.
If you are a family member, the good news is that you are not responsible for credit card debt if you are not a cosigner. You may even be safe as a spouse as a non-cosigner unless you live in a community property state. In a few words, what happens to credit card debt when you die is that it depends. As much of the debt as can be covered by the estate will go toward paying off the debt, and if the estate is completely exhausted, then the credit card company cannot recoup the loss from anyone else.