So What Happens to Debt Upon Death?
“You can’t take it with you.“ So goes the age-old adage. Nevertheless, the statement is not an excuse to go nuts with one’s credit cards or paycheck, during a weekend getaway to Vegas. However, as it relates to credit card debt, oftentimes, one can actually do just that…take debt to the grave. To determine if this is indeed the case, the question instead then becomes whether a decedent’s debt is to be paid by the person’s estate or a surviving family member?
Upon death, assets that belong to a decedent’s estate are liquidated to determine what monies (if any) are available to its creditors. State law requires that the person’s estate, by way of its executor or administrator, satisfy creditors first. Once creditors are squared away, the state then allows the estate’s remainder to be distributed according to the decedent’s wishes (per their will) or the state’s mandates (without a will).
NOTE: Payable on death (P.O.D.) accounts (i.e. directed bank accounts, retirement funds, life insurance, etc.) are not included in a decedent’s estate and are not within the reach of creditors, upon a person’s death.
Generally speaking, there is typically no money left over to pay credit card companies once a person passes and senior creditors are paid from their estates. However, a credit card company could potentially be paid, if the decedent had a joint account holder or surviving spouse in a community property state. In either of the immediate scenarios, the surviving account holder would become 100% responsible for satisfying that person’s debt upon death.
NOTE: Credit card debts will not ordinarily pass to relatives, friends, or authorized users of the decedent’s credit card upon their death.
Lastly, if a decedent was in progress of filing bankruptcy, prior to their untimely death, the surviving spouse and/or estate could also be alleviated of the person’s credit card debt, as a discharge will still be granted, following their death.
If you’re concerned about leaving your loved one’s with debt, after you’ve passed, contact REFUGE Law to address your sensitive questions or concerns. Make an appointment to speak with one of our experienced bankruptcy attorneys. Call us today at (404) 618-2733 in Georgia, (713) 570-6377 in Texas, to discuss.CONTACT REFUGE LAW TODAY