Q: This may sound like a crazy question, but I trust your judgment and the advice I read in your column and your posts. I’m not trying to avoid repayment of what I know I owe on various credit cards and am making progress, paying more than the minimum due, and have stopped using them. I am in my late 60s, not married and have no children, and I know that despite progress in paying down the debt, I probably won’t be able to be debt free anytime soon. So, what happens to the debt if I pass away before it’s paid off?
A: I’m so sorry you’re mired in debt. But, keep plugging away; you may get rid of it sooner than you think. And, your question isn’t crazy at all. It’s something that many people are concerned about. They don’t want their heirs strapped with their debt.
As for the credit card debt, it doesn’t necessarily die when you do. Unless there was a co-signer on the cards, when you die, your estate is responsible for your debts. Your personal representative, administrator or executor will take an account of all your assets and liabilities. Depending on the laws where you live, the executor will determine what bills get paid before any assets are distributed to your heirs. If your estate is insolvent, and there isn’t enough money to pay your bills, then the credit card companies could just be out of luck.
Here’s something your heirs should know. The Credit Card Act of 2009 has a provision that says when an estate administrator or executor asks a credit card lender for the outstanding balance of a deceased person, the company has to provide it within 30 days of the request. If the bill is paid within 30 days, no interest charges may be imposed. The credit issuer is also banned from adding fees and interest while the estate is being settled.