Get the Knowledge to Protect your Credit Card when You Die

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What happens to credit card debt when you die is a question that may seem difficult to answer. The last thing you want to do is leave your heirs with unwanted liability from unpaid credit card debt. We will unpack the issues at hand and offer the knowledge you need to protect yourself and your family.

Here is the first thing to know – your creditors can’t pursue credit card debt payments after your death. However, never think that death is the ultimate solution to credit card debt relief. There are lots of other ways to get rid of credit card debt.

What To Do After a Cardholder’s Death

Stop Using the Card – First, do not incur more debt, even with an authorized user. It is considered fraud if you are not the primary user. Make a List of the Outstanding Credit Card Accounts – If you are the surviving spouse, gather all documents and make a list of the debts to pay off.

How the Creditors Are Paid Back

After your death, your assets are used to repay your credit card debt. Then, the remaining assets are distributed to your heirs. The executor of your estate takes care of all these things.

What If You Owe More Than the Sum of Your Assets?

That means that your estate is insolvent. In this situation, your heirs may have to repay your credit card debt. However, it depends on several factors.

Assets You Cannot Use to Repay Creditors

Though assets are used to repay the deceased person’s credit card, there are some restrictions. Credit card debt is considered the lowest priority over other obligations, like secured loans backed by collateral. State law determines which creditors get the highest priority if your estate cannot satisfy the remaining amount. Here are a few assets which the executor can’t use to repay the debt: – Life Insurance Proceeds – Brokerage Accounts – Retirement Accounts – Assets in a Living Trust