We’re continuing our deep dive into inherited debt with a closer look at credit card debt. It’s extremely common for someone to have credit card debt since 82% of Americans currently have at least one. Over half of credit card holders have a balance, with the average household credit card debt sitting at $6,088.
When you’re managing a family member’s estate that includes handling the deceased’s debts. When credit cards have balances they must be paid, it’s just a matter of how and by whom.
Credit Card Debt Has to Be Repaid by the Estate or Joint Account Holder
Unlike student loan debt, credit card debt is only from a private lender, not the federal government. That means there isn’t any government guarantor that’s going to wipe the slate clean after the borrower dies. Credit card companies are going to want their money.
When it’s a joint credit card account the other account owner will be responsible for all of the debt. The same is true if there’s a co-signer on the account.
If there’s no joint account holder or co-signer, the lender will file a claim against the estate during the probate period to get the credit card debt repaid. At that point, the estate is going to have to repay the debt – if the funds are available.
One thing that goes against the credit card companies is that it’s unsecured debt. Secured debts like auto loans and mortgages are usually paid first, and there might not be enough left to pay credit card balances.
Family Members Are Never Responsible for Repaying Credit Card Debt
While the deceased was responsible for paying the credit card debt, their family members never are. It’s the same as if the person were alive. If they had a balance while alive, the credit card company couldn’t come to you demanding repayment.
If a credit card company or any other creditor does try to pressure family members into paying off the debt it should be reported to state authorities. The Fair Debt Collection Practices Act (FDCPA) protects all consumers from such activities.
How an Estate Pays Credit Card Debt
Finances can be complex after a death. It isn’t always easy to wrap up all of the loose ends that come at the end of a person’s life, especially when debt is involved.
During the probate period when debts are paid, assets are sold and benefactors are awarded their inheritance, that’s when credit card companies will come knocking. If there are enough cash funds available that is the simplest way to pay off the deceased’s credit card debt. If not, assets will be sold to pay off debts, including credit card debt.
In a way the beneficiaries will pay the credit card debt, because debts must be repaid before any distributions are made to beneficiaries. That means less money is inherited by benefactors.
At Direct Cremate we can help you keep cremation services simple and affordable so you can focus on managing the deceased’s debts, not adding to them. Contact us any time of day by phone or text to get the process started.
