Credit Card Debt That Outlives Mom

 By SHERISSE PHAM

 

Following a recent post on the rising levels of credit card debt among the elderly, several readers raised an important question: What happens when borrowers die? Do they take their credit card balances to the grave, or are those left behind responsible for the debt?

Tom from Vancouver Island, British Columbia, offered an answer: “Excess debt over the value of the estate is considered insolvent and cannot be passed on to heirs.” He’s right, it turns out.

Experts say that unlike a mortgage or a car loan, credit card debt is unsecured, meaning that it isn’t tethered to an asset. When someone dies, credit card companies have to wait near the back of the line to receive payment. If what’s left over after settling the estate isn’t enough to pay the bill, credit card debt is written off. Read more...