Almost half of American adults — about 46% — say that if they died today, their loved ones would inherit their debt, according to a 2024 survey. The percentage jumps even higher — to 58% — among consumers who make at least $150,000 a year. This shows that the majority of consumers aren’t financially prepared for what happens when they die.
Unfortunately, credit card debts don’t disappear when you die. The debt is paid off via your estate’s assets, which includes everything you own — like your car, home, bank accounts and investments.
The executor of your estate, the person who carries out your wishes, will use your assets to pay off your credit card debts. But when your credit card debts have depleted your assets, your heirs can be left with little or no inheritance.
If you’re worried about loved ones being stuck with your debts after you die, make sure you understand your rights. You may even want to work with an estate planning attorney to help protect your assets.
[Read: Best Balance Transfer Credit Cards.]
Who Is Responsible for Your Debt When You Die?
When a family member dies, relatives typically won’t have to pay off their credit card debts. But there are some exceptions.
A family member could be liable for paying down debt your debt if they’re:
— A co-signer on a loan or credit card
— A joint account holder on a credit card (not an authorized user)
— The surviving spouse living in a community property state like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin.
— The surviving spouse or the executor of the estate and is required by state law
It’s important to note that while an authorized user is not liable for the credit card debt, they should stop using the card immediately when the primary cardholder dies. If they continue using it, assuming the debt will just go unpaid, they could be held liable.
If sorting out debts is causing strife, family members can check the deceased’s credit reports. The spouse or executor of the estate may mail a request for a report to each of the three major credit bureaus.
How Are Your Debts Paid After You Die?
The legal process of paying your debts and distributing what’s left to your heirs is called probate.
Unless you have a living trust or make other arrangements, a probate court will determine your financial affairs after you die. In most states, an executor who is appointed by the court or named in a will is responsible for handling the final details of your estate.
Sometimes the probate process is straightforward, and other times it plays out in probate court over months or years.
One straightforward situation is when an unmarried person dies and has credit card debt but no assets. In that case, the creditor probably won’t collect the debt, says Scott Schomer, adjunct professor at Loyola Law School and founder of Schomer Estate & Wealth Advisors, a Los Angeles-area firm that deals with estate planning. So if there is no estate to pay off the credit card debt in question, it will just go unpaid.
[Read: Best Rewards Credit Cards.]
If a person has credit card debt as well as assets, the main question is whether the assets are available to the creditor, Schomer says. If the deceased had a life insurance policy, proceeds go to beneficiaries before debts are repaid. If the deceased had assets and debt, the executor has to abide by a basic rule, Schomer says: Beneficiaries can’t take money without paying the bills. The first debt the estate has to pay is secured debt, such as the balance of a mortgage or car loan, he says.
Next, the estate usually pays administrative and lawyer fees, followed by unsecured debt, such as credit cards, Schomer says. Creditors must submit any claims against the estate by the state’s deadline. If that claim meets the deadline and the estate has sufficient assets, it must be paid.
If the estate pays a mountain of credit card debt, fewer assets could be left for heirs expecting an inheritance. But rules vary by state, and arrangements made before death will affect how much debt is paid back.
How Can You Avoid Probate?
The best way to avoid probate is to have a living trust, because assets held in a trust will not be subject to probate. The trust will own the assets, and they will be distributed according to the instructions in the trust.
“There is no substitute for a good estate plan,” Schomer says. “If you get your assets into a living trust, it doesn’t offer creditor protection per se, but it does give you a lot more flexibility (than probate).”
The trust will allow your beneficiaries to save time and money they might otherwise spend in the probate process, Schomer says. Also, it allows them to negotiate with credit card companies if the deceased had outstanding debt.
Even when the family does not need to open a probate case to settle the estate, creditors might try to sue. An executor or a lawyer could try to negotiate the debts with creditors in these instances because they will have “huge up-front costs” for filing probate claims, Schomer says.
“It puts you in control rather than the court,” he says.
[Read: Best Cash Back Credit Cards.]
How Can You Prevent Passing Down Debt Problems?
Your first step — if you haven’t already done so — is to have an attorney draw up a will or trust. Estate planning can help by delineating where assets will go, saving loved ones time and money.
Keep in mind that even with well-laid plans, family members may still be hassled by creditors. Debt collectors can contact family members to discuss debts and payments from the estate, but it’s illegal for them to state or imply that the family member is personally responsible for that debt.
The Fair Debt Collection Practices Act prohibits debt collectors from harassing, oppressing or abusing any family member they contact. Plus, survivors can write a letter to the debt collectors and tell them to stop all contact. Just be sure your family members are well-informed of what is and isn’t their responsibility to pay.
Next, make sure to keep organized records in a secure yet easy-to-find place. Family members should be able to quickly access your credit card accounts and look up balances without having to rummage through drawers or flip mattresses. They’ll have enough to deal with planning the funeral.
“To the extent people can keep good records of that kind of information, it’s very helpful to survivors,” says Lori Trawinski, senior director of finance and employment for AARP’s Public Policy Institute.
As much as you can, share information about debt with family members, including the extent of your debt.
“It’s a difficult thing,” Trawinski says. “People are very private about their finances. We hear a lot of stories about parents not informing their children about debt they have. We hear the same stories about spouses, and the other spouse is totally unaware the person had credit card debt.”
More from U.S. News
How to Get Rid of a Credit Card
How to Navigate Credit Card Customer Service
You’ve Missed a Credit Card Payment. What to Do Now?
What Happens to Credit Card Debt When You Die? originally appeared on usnews.com
Update 06/04/25: This story was previously published at an earlier date and has been updated with new information.
