Can Credit Card Companies Take Your House After Death?

When a person passes away, concerns often arise regarding outstanding debts, especially credit card balances, and their impact on family assets, including the home. Credit card debt is unsecured, meaning it is not directly tied to a specific asset like a house or car. While family members are generally not personally responsible for a deceased individual’s debts, the deceased person’s estate usually bears the responsibility for settling these obligations. This article clarifies how credit card companies pursue these debts and outlines protections for family assets, particularly the deceased’s home.

Responsibility for Debts After Death

Debts after a person’s death are generally not inherited by surviving family members. Instead, responsibility falls upon the deceased person’s “estate.” An estate encompasses all assets owned by the individual at the time of their death, including real estate, vehicles, bank accounts, investments, and personal possessions.

Creditors, including credit card companies, pursue repayment from this estate, not from individual heirs or beneficiaries. Credit card debt is unsecured because it is not backed by specific collateral. This distinction influences how and when these debts are paid from the estate’s assets.

Creditor Claims Against the Estate

The process by which creditors seek repayment from a deceased person’s assets is managed through a legal proceeding known as probate. During probate, an executor or personal representative oversees the estate’s administration, including identifying and paying outstanding debts. Creditors must file a claim against the estate within a specific timeframe, ranging from a few months to a year, depending on the jurisdiction. Failure to file a claim within this period often results in the creditor forfeiting their right to collect the debt.

Once claims are filed, the estate’s debts are paid in a specific order of priority. Funeral expenses and administrative costs are paid first, followed by secured debts like mortgages or car loans. Unsecured debts, such as credit card balances, are usually among the last to be paid. If the estate’s assets are insufficient to cover all debts (i.e., insolvent), unsecured creditors may receive only a partial payment or nothing. If no assets remain after higher-priority debts are settled, credit card companies generally cannot collect further.

Protecting the Deceased’s Home

A key concern is whether a credit card company can force the sale of a deceased person’s home to satisfy debts. Legal protections may shield a residence from unsecured creditors. Homestead exemptions, varying by jurisdiction, can protect home equity or the entire property from general creditors. These exemptions often protect a surviving spouse or minor children, allowing them to retain the family home.

Property held in co-ownership, such as tenancy by the entirety or joint tenancy with right of survivorship, typically passes directly to the surviving owner(s) outside of probate. This means the property may not be part of the deceased’s probate estate and is generally inaccessible to their individual creditors. Some jurisdictions also have spousal rights that protect a surviving spouse’s interest in the marital home from the deceased spouse’s individual debts.

When Personal Liability for Debts Arises

Family members are generally not personally responsible for a deceased person’s credit card debt, but specific situations can lead to liability. One common scenario involves joint accounts, where a surviving joint account holder is 100% responsible for the entire debt. Similarly, if an individual co-signed on a credit card account with the deceased, they remain legally obligated.

Authorized users are generally not personally responsible for the debt. However, an authorized user who continues to use the card after the primary cardholder’s death could be held liable for charges incurred after that point.

In community property jurisdictions, spouses may be liable for debts incurred by either partner during the marriage, even if only one spouse was on the account. This shared liability means the surviving spouse could be responsible, though specific rules vary by jurisdiction.