Who inherits credit card debt when the cardholder dies?

On Behalf of | Jun 13, 2015 | Probate And Estate Administration

When a loved one passes on, the last thing you want to think about is dealing with their credit card debt. Yet, creditors are usually not going to wait for too long before trying to collect their owed interest. Though this usually goes smoothly, it can become sticky rather quickly.

In the majority of cases, the debt will be covered by assets from the estate. Cars, homes and other personal property will be sold off until the debt is covered. If there is not enough to cover the debt even after everything is sold, many creditors will simply forgive the rest and be on their way. But in some instances, they will try to collect the full amount.

In communal property states like Nevada, the spouse may be held responsible for the remaining balance. The spouse can also be held responsible for the debt if it was a jointly-held credit card; naturally, anyone whose name was on the card would be responsible for the debt.

It is important that any heirs you leave behind know that they will not be first in line when it comes to the distribution of assets. They should cut up the credit cards of the recently deceased and send them, along with a notification of death, to the creditors. It is also important for credit report bureaus to know of the passing. It would be prudent to have the life insurance policy examined by an expert attorney to see if any insurance to cover credit card debt was purchased.

Consumer debt can make estate planning and distribution a tricky situation. Often the best bet is to have an attorney work with the family and debt collectors simultaneously.