When you die, your credit card debt doesn’t just go away, but it doesn’t necessarily trickle down to your loved ones either.
There is a very intense process called ‘probate’ that deals with debt after you die.
Instead of going directly to your loved ones to pay, your debt, including your credit card debt will be paid using your assets, such as your car, your home and your bank accounts.
A probate court will assess your financial situation after you pass away and an appointed executor will deal with your estate, debt and what happens to it all.
In some cases, your debt can and will easily be forwarded on to a living loved one. Debt that has been accrued jointly, such as a shared credit card loan, auto loan, business loan, etc.
There are also nine states that are “community property states,” including California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
What is a ‘community property state’? Community property states follow the rule that all assets acquired during the marriage are considered “community property.”
Sadly, dying with debt is incredibly common. Statistics show that 3 out of 4 people pass on while having debt.