Dealing with the death of a relative can include all sorts of troubles, but one it shouldn’t include is paying off the deceased’s credit card debt.
Paying off such bills can seem like a moral obligation to survivors, but in general it isn’t a legal one.
There are a few times when the credit card debt of deceased relative will have to be paid — such as a wife who has a joint credit card with her husband who died after he rung up a lot of charges on the credit card. But for the most part, the credit card debt of a dead person goes to the grave with them and doesn’t have to be paid by their heirs.
The estate is responsible
A credit card company can make a claim for unpaid bills to the estate of the deceased, though it’s likely to be at the bottom of the list of creditors to be paid if there’s any money in the estate.
The debts of the deceased are the responsibility of the deceased, and are deducted before any money left in the estate is paid to the heirs.
If the estate goes into probate — a legal proceeding for the administration of the estate — then the court will decide which creditors get paid. Other expenses besides credit card debt will likely be paid first, including taxes, mortgages, Medicaid, administration and funeral expenses.
Some inheritance money is paid directly to heirs, such as from an insurance policy, and isn’t part of the estate.
Heirs can’t be harassed
Relatives are protected from creditors by the Fair Debt Collection Practices Act, a federal law with severe penalties for violators.
Creditor and collection agencies shouldn’t be contacting heirs who give them contact information for the person handling the estate, such as the executor or a personal representative. Lenders also aren’t allowed to mislead people into thinking they have a legal responsibility to pay their dead loved one’s credit card debt.
When relatives are liable for credit card debt
If a relative, usually a spouse, is listed as a joint account holder on a credit card, then they’re responsible for that debt. Even an authorized user, such as a son, may be held liable for the credit card debt if their parent dies.
Using a deceased person’s credit card after they’ve died, such as for funeral expenses, could lead to being responsible for at least paying that part of the bill.
Laws vary by state, however. Community property states may consider debts that happen after a marriage to be the responsibility of both people, such as in a loan.
The best thing to do if you’re uncertain if you should pay off the credit card debt of a loved one is to find a good lawyer and get their help. Their legal fee may be a lot less than the hassle you could face later from credit card companies.