Once a person has died, their estate is responsible for paying off any debts owed, including credit card debts. Family members are generally not responsible for using their own money to pay off credit card debts after death. Executors should also note that while credit card debts must be paid off, the executor has a duty to pay the deceased's debts in the proper order. Credit card debts are the last estate debts that must be paid.
The executor can be held personally responsible for the non-payment of inheritance debts in the order established by law. To prevent identity theft, the executor must send a copy of the death certificate to the three major credit reporting agencies (TransUnion, Equifax, and Experian). If your estate is solely responsible for the debt and there isn't enough money in your estate to cover it, the debt ends there. Laws can vary from one community property state to another, so if you live in one of these states, ask an experienced estate law attorney in your state what your responsibilities are.
This means that the cosigner's estate will be the new cosigner and will be responsible in the event of default by the borrower. Holders of credit card debt can file a lawsuit against an estate for the debt, but they cannot go after their family members. If there is more debt than all of the equity, most of the debt that cannot be paid off simply disappears. In some states, the spouse may be responsible for some of these bills, but otherwise they usually disappear if the estate can't pay them.
As a result, beneficiaries receive them regardless of their debts, and the executor or administrator of an estate cannot use them to pay off credit card debts. The executor (see next section) of the estate must first take care of the debts, before deciding how to disburse the rest to the heirs. Once the executor is named, if there are any outstanding credit card bills left, credit card companies or collection agencies will send notifications informing them that a claim has been filed against the estate. If you are the surviving spouse or the personal representative, executor, or administrator of the estate of a deceased person, debt collectors can contact you to discuss debts and estate payments.
Credit card companies can contact survivors after a death for information, such as how to contact the executor of the deceased's estate. The opinions expressed here are solely those of the author, not those of any bank, credit card issuer, or other company, and none of these entities have reviewed, approved, or otherwise endorsed. If there were no co-signers, co-account holders, or other exceptions, only the deceased person's estate owes the debt.