What Happens to Debt After Death?

Debt Consolidation And LoansWhat happens to credit card debt for a deceased spouse or the financial legal obligations for the debt of a dead spouse is largely dependent on where you live; whether these are single or joint accounts; an estate's assets or lack thereof; and whether or not a will has been made.

In the emotional turmoil of a spouse's passing, it's likely that one of the lowest priorities will be the deceased spouse's debt. But the business of life continues, and how the surviving spouse settles the credit card debt (when necessary) and all the other financial details for a deceased spouse may have an impact on their credit score and credit history for many years to come.

Credit card debt for a deceased spouse

If the deceased's credit card is in their name only and has a balance, the credit card company can make a claim against their estate for the balance. If the assets of an estate are managed by an executor through probate, it's the executor's responsibility to decide which debts will be paid first. After the debts are paid, any assets are distributed according the deceased's will, if one has been made, or by state law, if no will exists. If the deceased is the only name on the account and his or her assets are exhausted before the credit card balance has been paid, the credit card company writes this off as a loss.

Credit card debt on shared accounts

If both spouses' names and signatures are on a shared credit card account, the remaining spouse is liable for any balances instead of, or in some cases along with, the deceased's estate. But if the remaining spouse hasn't signed the application, isn't liable for payment, and is only an authorized user on the account, he or she is probably not responsible for paying any outstanding balances.

Community property states

Further complicating the financial and legal obligations for debts of a dead spouse is whether or not they live in a community property state. In community property states, most assets and debts accrued during a marriage are considered joint property. These states include:

  • Alaska
  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

If a deceased spouse in one of these states has credit card debts, the remaining spouse may be liable for these debts, and if they're unpaid, that person's credit score and credit history may suffer.

As you can see, there are a lot of conditions and exceptions that apply to credit card debt for a deceased spouse, particularly as to whether or not an unpaid credit card debt affects the living spouse's credit score and history. This is dependent on such a wide range of factors that there are few universal rules. Be sure to consult a financial professional and/or an estate lawyer to determine what your obligations may be in your specific situation.


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