Who is responsible for credit card debt when someone dies?

There is a lot of confusion concerning what happens with credit card debt after someone dies. It is not uncommon for creditors to mislead consumers about such debts, even when the consumer is not responsible for the debt. While there are times when someone can be drawn into the collections process following the death of another, this only occurs under certain situations. The following are a few tips for Tennessee residents to avoid getting stuck with large amounts of credit card debt.

One instance when an individual may be liable for the credit card bills of another is when the individual is a co-signer for the credit card. It is very common for credit card companies to require co-signers when the person applying for the card is not working, or has little to no credit history. Joint accounts are also becoming increasingly common for the adult children of aging parents. It is also a common practice for business partners.

Another instance when an individual may be responsible for the credit card debt of another occurs when the parties were married. The rules regarding marriage and debt repayment are complicated and vary from state to state. In community property states spouses can be held responsible for each other’s credit debt even if the debt is not jointly held. In addition, credit companies can go after community property to repay the other party’s obligations.

Tennessee is an equitable distribution state. This means that property is split fairly, but not necessarily evenly. One benefit of equitable distribution is that debt held solely in the name of one party belongs to that party. In divorce, a party may be held liable for the debt, but only if the debt was used to pay for marital property. Also, if a spouse dies and the debt was secured, the credit card company can still repossess the property for non-payment.

Source: Fox Business, “Don’t Get Stuck With Debt that Isn’t Yours,” Roman Shteyn, Nov. 29, 2012