Skip to content
Mastry Law, St. Petersburg Attorney
(727) 896-5191 
mike.mastry@mastrylaw.com 
  • Home
  • Estate Planning Fundamentals
    • Probate & Estate Administration
    • Asset Protection
    • Fishing & Natural Resource Law
    • Business Succession Planning
    • Estate Tax Planning
    • Charitable Planning
    • Veterans Benefits
    • Special Needs
  • Life Stages
    • Planning for Married Couples
    • Planning for Minor Children
    • Blended Families
    • Peak Earning Years
    • Planning for Retirement
  • Our Process
    • Becoming a Client
    • Book a Call
    • ARAG Members
  • Resources
    • Download and Guides
    • Blog
    • Subscribe
    • For Professional Advisors
    • FAQ
  • About Us
    • Mike Mastry
    • Testimonials
  • Contact Us
Menu
  • Home
  • Estate Planning Fundamentals
    • Probate & Estate Administration
    • Asset Protection
    • Fishing & Natural Resource Law
    • Business Succession Planning
    • Estate Tax Planning
    • Charitable Planning
    • Veterans Benefits
    • Special Needs
  • Life Stages
    • Planning for Married Couples
    • Planning for Minor Children
    • Blended Families
    • Peak Earning Years
    • Planning for Retirement
  • Our Process
    • Becoming a Client
    • Book a Call
    • ARAG Members
  • Resources
    • Download and Guides
    • Blog
    • Subscribe
    • For Professional Advisors
    • FAQ
  • About Us
    • Mike Mastry
    • Testimonials
  • Contact Us

What Happens to Credit Card Debt when You Die?

Estate Planning, Probate

Credit 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’s what happens to your credit card debt when you die” from CNBC explains how credit card debt works after someone passes away.Credit Card Debt

Probate occurs after a person dies and their assets are frozen by the court, until their will is validated, assuming there is a will. Debts are then settled and the beneficiaries are identified.

Credit card debt is “unsecured” debt, meaning it isn’t linked to any kind of collateral, like a car or a house. The state will usually require the deceased person’s 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’t 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’s 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’s death, like creating a trust.

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.

This won’t be the most pleasant discussion with a financial partner, but it 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’s what happens to your credit card debt when you die”

Post navigation
← Previous Post
Next Post →

Join Our eNewsletter!

Please Share!

Recent Posts

  • How Do You Handle Probate?
  • What Is Status of Larry King’s Handwritten Will?
  • Does Living Trust Help with Probate and Inheritance Taxes?
  • When Did You Last Review Beneficiary Designation Forms?
  • Should Unmarried Couples have an Estate Plan?

Categories

  • 401(k)
  • Asset Protection
  • Charitable Giving
  • Charitable Remainder Trust
  • Elder Care
  • Elder Law
  • Estate Planning
  • Estate Tax
  • Executor
  • Finance
  • Financial Planning
  • Grantor
  • Guardian
  • Guns
  • Health Care
  • Inheritance
  • IRA
  • Irrevocable Trust
  • Life Insurance
  • Living Will
  • Long Term Care Planning
  • Medicaid
  • Medicare
  • Personal Representative
  • Power of Attorney
  • Probate
  • Protecting Children
  • Retained Life Estate
  • Retirement Planning
  • Social Security
  • Special Needs
  • Special Needs Trust
  • Sports
  • Tax Planning
  • Travel
  • Trust
  • Trustee
  • Trusts
  • Wills

We'd Love to Talk With You!

Mastry Law
Mastry Law, P.A.
570 2nd Ave S
St. Petersburg, Florida 33701

Phone: (727) 896-5191 Email: mike.mastry@mastrylaw.com This inquiry requires email verification. If you do not have access to an email account, please call (727) 896-5191

  • Mastry Law, P.A.

Route

Your location: Use my current location
No route could be calculated.

Contact Us

Gary Michael Mastry IIClients’ ChoiceAward 2017
Gary Michael Mastry IIClients’ ChoiceAward 2018
Three Best Rated 2019
Best of Tampa Bay 2017
Probate Attorneys in St. Petersburg
Best Estate planning lawyers in St Petersburg
  • Home
  • Disclaimer
  • Privacy Policy
  • Estate Planning
  • Becoming a Client
  • FAQ
  • About Us
  • Contact Us
  • Home
  • Disclaimer
  • Privacy Policy
  • Estate Planning
  • Becoming a Client
  • FAQ
  • About Us
  • Contact Us

Copyright © IMS. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement. Some artwork provided under license agreement.

IMS