Credit card debt can be a significant financial burden during life, but what happens to that debt after death? It’s a question that many people may not think about, but it’s essential to understand the implications of any outstanding balances on your credit cards.
When someone passes away, their assets are typically distributed to their heirs or beneficiaries as per their will. However, debt is a different story. Any unpaid debts, including credit card balances, must be paid off before any remaining assets can be distributed.
So, what happens to this debt after death? Let’s take a closer look.
Firstly, it’s important to note that credit card debt is considered an unsecured debt. This means that there is no collateral, such as a house or car, to secure the debt. Therefore, if the deceased person has any assets, such as a house or savings account, the executor of the estate will need to use those assets to pay off any outstanding balances on the credit cards.
If there are not enough assets to pay off the debt fully, the credit card company may be willing to negotiate a settlement with the executor of the estate. Alternatively, the remaining debt may be written off entirely by the credit card company.
It’s worth noting that if there are joint account holders on the credit card, they will be responsible for any outstanding balances. If the deceased person was the sole account holder, the responsibility for paying off the debt falls solely on their estate.
Additionally, if the deceased person had a co-signer or authorized user on their credit card account, they may be held responsible for any outstanding balances, even if they were not the primary account holder.
In some cases, the deceased person may have had credit card insurance, which would pay off the outstanding balance upon their death. However, credit card insurance is not a common type of insurance and is usually only offered as an optional add-on by the credit card company.
In summary, credit card debt does not disappear after death. It becomes the responsibility of the estate to pay off any outstanding balances. If there aren’t enough assets to cover the debt, the credit card company may be willing to negotiate a settlement, or the remaining debt may be written off entirely.
Contact the Estate Planning Attorneys at Deliberato Law Center
If you’re concerned about leaving behind credit card debt,, please do not hesitate to reach out to the experienced attorneys at Deliberato Law Center. Give us a call at 216-341-3413 or fill out the form below to get started.