[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.amorusolaw.com\/blog\/what-happens-to-credit-card-debt-when-someone-dies-new-york-ny-greenwich-ct\/#BlogPosting","mainEntityOfPage":"https:\/\/www.amorusolaw.com\/blog\/what-happens-to-credit-card-debt-when-someone-dies-new-york-ny-greenwich-ct\/","headline":"What Happens to Credit Card Debt when Someone Dies?","name":"What Happens to Credit Card Debt when Someone Dies?","description":"\u201cIf you get bogged down with a high balance that you can\u2019t easily afford to pay off, it can take years to get out of debt. However, what happens to your credit card debt if you die before you\u2019ve repaid it?\u201d Credit card debt worries create sleepless nights for many. Will a surviving spouse or […]","datePublished":"2020-12-21","dateModified":"2023-07-29","author":{"@type":"Person","@id":"https:\/\/www.amorusolaw.com\/blog\/author\/amorusolaw\/#Person","name":"Amoruso & Amoruso LLP","url":"https:\/\/www.amorusolaw.com\/blog\/author\/amorusolaw\/","identifier":5,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/12de032c04195e9c39a06a6d6eea182f7b4fa655c20e245f8094a244b5cdd0cb?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/12de032c04195e9c39a06a6d6eea182f7b4fa655c20e245f8094a244b5cdd0cb?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Amoruso & Amoruso LLP","logo":{"@type":"ImageObject","@id":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/07\/amoruso-logo.svg","url":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/07\/amoruso-logo.svg","width":0,"height":0}},"image":{"@type":"ImageObject","@id":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/04\/6a01901dd0a082970b026be42e71ec.jpg","url":"https:\/\/www.amorusolaw.com\/wp-content\/uploads\/2023\/04\/6a01901dd0a082970b026be42e71ec.jpg","height":600,"width":395},"url":"https:\/\/www.amorusolaw.com\/blog\/what-happens-to-credit-card-debt-when-someone-dies-new-york-ny-greenwich-ct\/","about":["Beneficiary","Credit Card Debt","Estate Planning","Heir","Incapacity","Life Insurance","Probate","Surviving Spouse"],"wordCount":543,"keywords":["Beneficiary","Credit Card Debt","Estate Planning","Heir","Incapacity","Life Insurance Policy","Probate","Surviving Spouse"],"articleBody":"\u201cIf you get bogged down with a high balance that you can\u2019t easily afford to pay off, it can take years to get out of debt. However, what happens to your credit card debt if you die before you\u2019ve repaid it?\u201dCredit card debt worries create sleepless nights for many. Will a surviving spouse or family members be burdened with the debt? A recent article titled “Here\u2019s what happens to your credit card debt when you die” from CNBC explains how post-mortem credit card debt works.Probate occurs after a person dies and their assets, aka their estate, is frozen by the court, until their will is validated, assuming there is a will. The debts are then settled and the beneficiaries are identified.Credit card debt is \u201cunsecured\u201d debt, meaning it isn\u2019t linked to any kind of collateral, like a car or a house. The state will usually mandate the person\u2019s remaining assets to be used to pay off credit card debt.Assets used to pay off the debt could include cash, or property with cash value. Certain types of accounts, including retirement or tax-deferred accounts, brokerage accounts and life insurance payouts, might be shielded from this process. Laws vary by state, so an estate planning attorney who practices in the state where the decedent lived will be the best source to address this issue.Is the surviving spouse responsible for credit card debt?If the person has no assets, then loved ones won\u2019t be responsible for the debt. However, if someone is a joint account owner on the credit card, then in certain states, the surviving owner may be responsible. Authorized users are generally not held responsible for the deceased\u2019s unpaid balances.Heirs may not be legally responsible for paying the credit card debt, but all debt must be settled before loved ones can receive their inheritance. Workarounds, if possible, need to be done in advance of the person\u2019s death, like creating a trust fund.Probate laws differ by state, but any joint account holders on credit cards need to be aware of the debt and have a plan for when one of the owners dies. If paying off the debt is not possible, perhaps one of the joint owners may seek to remove themselves from the credit card if the other person was responsible for creating the debt.A frank discussion about the debt and how to manage it is definitely in order. One solution may be to purchase a life insurance policy and have the proceeds go to the person who may be responsible for the debt. A term policy might be a manageable way to do this, especially if both people depend on two incomes to manage their bills.This won\u2019t be the most pleasant discussion with a financial partner, but is necessary, along with planning for incapacity. Perhaps the best thing that can come out of the credit card problem, is a decision to have an estate plan created that includes addressing the debt and preparing for the future.Reference: CNBC (Nov. 21, 2020) “Here\u2019s what happens to your credit card debt when you die”For more information on asset preservation and estate planning, please visit my estate planning website."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Blog","item":"https:\/\/www.amorusolaw.com\/blog\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"What Happens to Credit Card Debt when Someone Dies?","item":"https:\/\/www.amorusolaw.com\/blog\/what-happens-to-credit-card-debt-when-someone-dies-new-york-ny-greenwich-ct\/#breadcrumbitem"}]}]