Who's Responsible for the Remaining Balances on Credit Cards Upon Death If There Is No Estate?

When a consumer dies without paying off his credit card balance, the credit card company he owes files a claim against the deceased's estate with the probate court. The probate court then distributes the deceased's remaining assets accordingly. If an individual dies with more debts than assets, however, he is "insolvent" and has no estate. Thus, the credit card company cannot file a claim for payment.

Additional Cardholders

When two people share a joint credit card account, both also share the burden of repayment. Should one cardholder die, the surviving debtor is responsible for paying off the credit card balance---regardless of whether or not she made the purchases. In this case, the deceased's lack of an estate is irrelevant. The credit card company will pursue the surviving cardholder for payment in full.

Family Members

If the deceased consumer was married and incurred the balance during his marriage, his spouse could be responsible for repayment depending on where the couple lived. If they lived in a community property state, the assets either spouse accrues during the marriage belong to both individuals equally. While community property laws differ in each community property state, a creditor can use the state's community property statute to pursue the surviving spouse for payment.

Unless a child or extended family member held a joint account with the deceased, the credit card company cannot hold any family member other than the deceased's spouse liable for paying off the card's remaining balance.

Tax Write-off

If the credit card belonged to the deceased alone and she did not live in a community property state, the credit card company can request that the deceased's family pay off the balance, but cannot force them to do so. The credit card company can, however, write off the balance the deceased owed at the end of the year. The Internal Revenue Service allows businesses to deduct the amount of any uncollectible debt from the company's taxable income---reducing its overall tax liability for the year.

Collection Activity

Credit card companies sell unpaid debts to collection agencies in batches. Sometimes credit card companies benefit more from continuing to try to recover the unpaid balance than from writing it off as a business loss. When a collection agency purchases the account, debt collectors will contact the deceased's loved ones and demand payment. While the surviving family members are not legally responsible for payment, sometimes they will pay off the balance simply as a respectful gesture for the deceased. Should this occur, the collection agency keeps a percentage of the payment while the credit card company receives the remaining funds.