Residents of Pennsylvania may be wondering how credit card debt is handled after the cardholder dies. After death, debts do not disappear. Instead, they become part of the person's estate. If someone wrote a will before their death, it will name an executor to administer the estate. When someone fails to leave a will a probate court will name an administrator. This person often ends up being a child or spouse.
Although a person's debts still exists after death, in most cases, an heir cannot be required to pay them off. One exception to this rule is if a person opened a joint account with the deceased person. In order for the financial part of someone's estate to be distributed, the executor must first make sure that the debts are paid off. If the estate is worth less than the amount of the debts, the executor may choose not to pay the creditors. In this case, the creditors usually write off the debts.
The executor of a will should let the deceased person's credit card company know of the death. If there is an outstanding balance, they may be able to negotiate with the creditors to pay a smaller amount. Although creditors can call once after a person's death to find out who the executor is, an executor or family member is not liable to pay for the debt regardless of what creditors may say.
An executor who is in charge of the administration of an estate must locate and handle the deceased person's financial assets until they can be distributed to the heirs. If an estate is worth over a certain amount, the assets may need to go through probate court before they can be administered.
Source: The Motley Fool, "What Happens to Credit Card Debt When Someone Dies", Peter Andrews, July 19, 2014