Does credit card debt get handed down when a person dies? The good news is that debt is generally not inherited the same way that a person's assets are when he or she passes away. This means that the son or daughter of someone who has just passed on should not worry about being liable for paying any outstanding credit card debt left behind by their parent.
However, anyone who cosigned for the card or is otherwise obligated to pay the debt will have to make arrangements to pay any balance that existed at the time of the other cardholder's passing. It is important to keep in mind that creditors are able to call one time to figure out how much was owed and who may or may not be responsible for paying off that debt. However, the executor of an estate may wish to negotiate a debt settlement, and it may then be a good idea to contact the credit bureaus to inform them of that person's death.
While the estate is liable for paying the final expenses of an individual, it is not required to pay any amount that exceeds the value of cash or assets available to pay off those debts. If an outstanding credit card balance remains after all assets are exhausted, the lender is responsible for those losses.
If the estate goes through probate, the amount of outstanding debt owed and how much will go to each creditor will be determined with the help of the court. An attorney who has experience in probate administration can assist the executor throughout this process.
Source: The Motley Fool, "What Happens to Credit Card Debt When Someone Dies", Peter Andrew, July 19, 2014