Will My Credit Card Debts Outlive Me?

Credit card debt – and debt in general – is a normal way of life for many Americans. In fact, it is not unusual for some individuals to have more credit card debt than assets. This is a concern, not only because of the high interest rates that credit cards traditionally produce, but because credit card way doesn’t necessarily go away following your death.

Essentially, if you have any assets that go into an estate, the estate must pay credit card debts and any other debts before any assets are distributed to your heirs, other than a statutory allowance for your immediate family members. Your reasonable funeral and burial expenses also are paid prior to any credit card debts being paid. Each creditor makes a claim against the estate for however much is owed on the debt, and those debts are pay in order of priority under state law. However, none of your heirs will inherit your debt. If there are insufficient assets in your estate to pay your credit card debt, then the debt simply will go unpaid.

Nonetheless, there are some exceptions. For instance, if there is a joint owner of your credit card debt, such as a surviving spouse, then he or she is still responsible for the entire amount of the debt. However, if your surviving spouse is not a joint owner of your credit card debt, then he or she is not required to pay the debt, no matter what your creditors might try to make you believe.

Dealing with debts after the debtor passes away is only one portion of the estate administration process. However, it is important that you aware of how debts will be settled following your death, and it’s important that your loved ones know their rights if you have outstanding debts when you pass away. You can avoid leaving the stress of dealing with your debts after your death by putting a comprehensive estate plan in place. If you need of assistance with your estate plan, no matter your situation, we have the knowledge and resources to assist you. Call Legacy Law Center today and learn how our Michigan estate planning attorneys can advocate on your behalf.