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Will I Inherit a Family Member’s Credit Card Debt?

Judith Trentman Wilson, Attorney at Law, P.C. March 20, 2020

If your Illinois resident family member dies with no more than the shirt on his or her back and a mountain of credit card debt, the most straightforward answer is, “no.”

However, life is rarely that uncomplicated. According to the Chicago Tribune, a couple of factors come into play when determining debt liability. Are you an authorized user or a joint holder on any accounts? Are there estate assets that can pay down the debt?

Authorized Account Users and Joint Account Holders

As an authorized user, you have a credit card with your name on it, but you are not the owner of the account. You can charge purchases up to the account limit but have no authority to alter the account. You are also not responsible for paying the bill, and this extends to any debt left after the primary account holder passes away.

Keep in mind that your family member permitted you to use this account by adding you as an authorized user, and this permission implicitly ceases with death. If you continue using the card after the account holder’s death — or rack up charges knowing that your relative is likely to die soon and leave you off the hook — creditors could charge you with fraud.

Alternatively, joint holders share equal responsibility managing the credit card account, even if one purchaser is much more active than the other. If one holder passes away, the account remains viable under any surviving cosigners. For example, if you helped your son or daughter open a credit card in college and have the harrowing experience of surviving your child’s death, you now also have the added burden of his or her debts if your name is still on the account.

Priority for Estate Claims

If your loved one passes away with a noteworthy estate, you and your fellow beneficiaries are the last in line to bite at the apple. Any assets left by your relative will first satisfy lien-holders or creditors with secured debts, like mortgage lenders who hold the house as collateral. After that, credit card and other unsecured debt companies collect what they can. The executor then distributes any remaining assets in the estate to beneficiaries, according to the will directives.