What Happens to Credit Card Debts after Someone Dies?

04 October 2017

When someone dies, it’s not true that any credit card debts are automatically written off. Instead, any individual debts must be paid using the money the deceased has left behind. Only if there isn’t enough money in the Estate may the debt be written off.

Paying Off Credit Cards after Death

If you are responsible for administering someone’s Estate, you need to find out what debts he/she owed, including any credit card loans that are yet to be paid off. You also need to determine whether these debts are held in the deceased’s sole name (‘individual debts’) or in joint names.

If a credit card is held in joint names and the other account holder is still alive, that person will then take on the debt in its entirety.

But if the credit card was held in the deceased’s sole name, you should contact the bank or financial institution and tell them about the death. This will lead to the account being frozen and will usually stop further interest accruing.

You then need to apply to the Probate Registry for a Grant of Representation. This will allow you to access the deceased person’s financial assets, which you can use to settle any debts that are due. Therefore you don’t have to settle any outstanding credit card loans from your own pocket.

With our Probate Complete Service we take full responsibility for getting Grant of Probate and dealing with the Legal, Tax (excl VAT), Property and Estate Administration affairs*.

* We can also pay all the costs of a Co-op Funeralcare funeral, providing the Estate owns sufficient assets which can be sold in due course to repay our costs.

Who Gets Paid First from an Estate in the UK?

Debts Must be Paid Off in a Particular Order

Once you’ve obtained a Grant of Representation from the Probate Registry, you must first pay off any secured debts that are due, such as a mortgage. Next, you should pay the funeral expenses and other costs that have been incurred as a result of administering the Estate.

Only once these have been paid can you turn your attention to unsecured debts, which includes credit cards. In some situations you may need to sell some of the deceased’s assets, such as their property or car, in order to settle the debt in full.

When you’ve paid all the debts that are due, the remaining assets left in the Estate can be distributed to the beneficiaries. These will either be the beneficiaries named in the Will, or beneficiaries determined by the Rules of Intestacy; if there is no Will.

Sometimes there won’t be enough money to pay off the credit card loan. Where there isn’t enough money to pay all the outstanding debts, it’s known as having an ‘insolvent Estate’. When this happens, it may be possible to write off the debt.

When debt is written off, it will ensure that the creditors cannot chase you or the deceased’s family members for payment. However, this is only possible if the Estate is insolvent – otherwise you cannot request that the debt is written off.

Probate Liabilities

If you have been tasked with administering a deceased person’s Estate, it’s worth knowing that you can be held personally responsible for any mistakes that are made. This includes failing to identify creditors and repay debts that are due.

If a creditor does comes forward after you’ve already distributed the Estate to the beneficiaries, you may have to settle the debt using your own money. To ensure mistakes like this do not arise, many people choose to instruct our specialist Probate Solicitors to apply for Probate and administer the Estate on their behalf.

There are no upfront costs to pay as our Probate and Estate administration fees are deferred and will be taken from the Estate once it is in funds.

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