On this page

What's next

man with phone and credit card
Debt Resolution

March 20, 2024

9 min

Can I Still Use My Credit Card after Debt Consolidation?

A woman sits on a couch holding a piece of paper and looking confused
Debt Resolution

March 15, 2024

11 min

A Guide to Debt Re-Aging

Judge Dismissing Debt Lawsuit
Debt Resolution

November 6, 2023

8 min

How to Get a Debt Lawsuit Dismissed

is debt relief right for you
Debt Resolution

March 7, 2022

4 min

Is Debt Relief Right for You?

Earn a high-yield savings rate with JG Wentworth Debt Relief

What Happens to Credit Card Debt When You Die?

What Happens to Credit Card Debt When You Die?

by

JG Wentworth

July 8, 2024

8 min

What happens to credit card debt when you die

If there’s anything less fun to talk about than credit card debt, it’s definitely death. While it’s an unpleasant topic, being prepared for the end of life extends beyond just writing a will or making funeral arrangements. It also requires considering the outstanding debts and financial obligations you may leave behind. 

One question that frequently arises is what happens to credit card balances and loans after someone passes away. Is the debt simply forgiven and written off? Or does it linger as a burden for surviving loved ones? Understanding this issue can provide immense peace of mind – both for the planning individual and for their family members. 

This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions. 

The fate of your credit card debt 

To cut right to the chase – when you die, any credit card debt or personal loan debt in your name alone does not automatically get excused. That unpaid balance remains as a liability that your estate is obligated to settle to the best of its ability from your remaining assets and finances. 

But that doesn’t mean your heirs automatically inherit the full responsibility for the debt. When it comes to who ultimately deals with an unpaid credit card balance, it depends on several key factors. 

Who must pay it? 

When you die, your estate (which includes assets like cash, investments, real estate, etc.) technically becomes the new owner of your debts. The debt doesn’t disappear, but it also isn’t automatically transferred to anyone else yet. 

During the probate process after your death, all outstanding debts are intended to be paid from your estate’s value before any remaining assets are distributed to heirs and beneficiaries per your will. This is why it’s critical to maintain updated records of debts, assets, account statements, etc. 

Only after all debts are settled to the extent possible from your estate’s resources would residual unpaid balances potentially become issues for next-of-kin. 

Your family’s responsibility  

The good news is credit card issuers cannot simply demand payment directly from your surviving spouse, children or other relatives after you die unless specific conditions are met: 

  • If a family member co-signed: Any debts that had a co-signer legally attached to them also become that co-signer’s responsibility after you pass away. This includes joint credit cards or loans. 

 

  • If debts are in a spouse’s name: In community property states, credit card debts or loans that either spouse incurred during the marriage may be considered joint marital debt that survives the death of one spouse. 

 

  • If they inherit assets tied to debt: If an heir or beneficiary chooses to retain ownership of any asset associated with an outstanding loan (house, car, etc.) they effectively inherit legal responsibility for that debt as well. 

 

  • If estate funds are insufficient: Lastly, if the value of your estate’s assets is insufficient to fully cover all outstanding debts during probate, the creditors could potentially pursue the deficiency balance from legal next-of-kin heirs after probate. 

 

Given these exceptions, it’s important to consult an estate attorney and revisit wills and accounts regularly to ensure proper liability protection. 

Other key considerations  

Beyond liability succession, there are other important implications when credit card debt is involved after someone dies: 

  • Impact on credit reports and scores: Once credit bureaus are notified of the death, that person’s credit reports are frozen and no longer actively updated or scored. Outstanding balances from then on only potentially impact the estate. 

 

  • Statute of limitations “restart”: When creditors submit claims against the estate for unpaid debt during probate, it legally reinstates or “restarts” the statute of limitations time window that they have to pursue collecting. 

 

  • Potential debt forgiveness options: In some circumstances, private student loans or medical debt may qualify for partial or full forgiveness after death through programs specific to those creditors. Credit card debt, unfortunately, typically does not. 

 

  • Six-month grace period: Credit card companies typically allow a courtesy grace period of around six months after death before escalating collection efforts against the estate and heirs. 

 

  • Debts beyond assets may be discharged: If your total outstanding debts exceed the remaining value of assets in your estate and probate finds no heirs willing or able to cover the deficiencies, the residual balances may legally end up discharged. 

 

"*" indicates required fields

Step 1 of 4 - Debt Amount

Choose your debt amount

$5,000 $25,000+

Give yourself peace of mind 

If you’re concerned about the potential scenario in which your loved ones are on the hook for your credit card debt, consider JG Wentworth. Our Debt Relief Program has helped countless individuals payoff their $10,000 or more in unsecured debt in a timely manner, allowing them to reclaim their financial freedom, and gain some peace of mind for their future. * 

  • One monthly program payment 
  • We negotiate on your behalf 
  • Average debt resolution in as little as 48-60 months 
  • 24/7 support 
  • We only get paid if we settle your debt 

 

The bottom line is careful estate planning and account record keeping during your lifetime is crucial. While credit card debt doesn’t automatically disappear when you die, you can take actions to protect your loved ones and assets from unduly suffering the consequences of those unpaid balances. 

* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required. 

Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment. 

JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy. 

Recommended reading for you

man with phone and credit card
Debt Resolution

Mar 20, 2024

9 min

Can I Still Use My Credit Card after Debt Consolidation?

A woman sits on a couch holding a piece of paper and looking confused
Debt Resolution

Mar 15, 2024

11 min

A Guide to Debt Re-Aging

Judge Dismissing Debt Lawsuit
Debt Resolution

Nov 6, 2023

8 min

How to Get a Debt Lawsuit Dismissed

is debt relief right for you
Debt Resolution

Mar 7, 2022

4 min

Is Debt Relief Right for You?