Does Credit Card Debt Live Beyond Your Lifetime?

Jan 5, 2017
Estate Planning Living Trusts

Many believe that credit card debt dies along with you.

Credit Card Debt
What happens to my credit card debt?

That is not exactly true. So what does happen to credit card debt after you pass away? There is no simple answer to this question. And the complete answer depends on a number of variables such as who else is on your account, whether you have a living trust, and what state you live in.

When you die, your estate is required to pay any outstanding debt. This includes credit card debt. Many creditors can try to benefit from your death and can be quite aggressive when trying to collect. They know that your spouse or family may be held accountable for the debt. Usually, the estate trustee, often the remaining spouse, or an executor is responsible for ensuring that all debts get paid.

Credit card debt should be paid off, but it should not be the first priority paying off any outstanding debt. If your family does not have the assets to pay off the credit card debt, the debt may be forgiven since a credit card company legally cannot force someone else to pay. This is different however if the account is shared by another living individual such as a partner or spouse. That survivor may be responsible for the outstanding balance.

Community property states can be more complicated.

Most assets acquired during a marriage are considered joint property. Therefore, a surviving spouse might still be held accountable for credit card debt even if the account was only under the deceased person's name. This might not always be true depending upon the state you live in, since community property laws differ by state.

The bottom line is never rely on what the collection agent tells you. Contact your AmeriEstate Trust Advisor for help administering your estate plan in the event of death or incapacity.