What Happens to Your Credit Card Debt When You Die?
According to Time magazine, the average American household has more than $16,000 in credit card debt. Some people are under the mistaken impression that this kind of debt dies with them. However, your heirs will be met with a terrible surprise if you don’t prepare to handle debt as part of your estate planning. Here is what you need to know.
How Credit Card Agreements Work
When you use a credit card, you sign in agreement to complete the payment. Passing away does not absolve your estate of that debt. Thus, credit card debts pass on in one of two ways.
- Through your spouse – If you have a living spouse, the creditors will seek payment from your mate.
- Through your estate – If you die without a living spouse, the credit card issuer will go after your estate for the balance due.
As a result of these factors, an executor who understands how credit card debt works will usually pay all legitimate bills without it even having to go through probate. An inexperienced executor who doesn’t understand the way credit card debt works may find out through the probate process that these bills need to be cared for from what you leave behind.
Planning Properly for Debt Resolution
To save everyone a headache during the probate process, it is a good idea to ensure that your executor understands how credit card debt works. Including how these debts are to be paid after your death will make the process easier, and won’t leave any surprises for heirs.
For more about how to properly arrange for these matters, please contact Petrov Law Firm. Our estate planning attorneys will be happy to help you prepare your estate properly. Just call 619-344-0360 to get started.
