What happens to credit card debt when you die?
In Australia, credit card debt becomes a part of a person’s deceased estate. An authorised representative of the estate can freeze the account and pay off the unpaid balance.
Key takeaways
- When a loved one dies, their credit card debt does not disappear. The deceased estate is liable to cover the costs.
- You can contact the deceased's bank to freeze the credit card account and authorise a repayment of the unpaid card balance. But only if you are an Authorised Estate Representative.
- If you share a joint account with the deceased, then you will gain sole control of the account, and you will be responsible for paying off the debt.
How to deal with a deceased person's card debt if you are an Authorised Estate Representative
The Authorised Estate Representative is allowed to handle the deceased estate's dealings, including unpaid credit card debts. Often this person is named in the deceased's will.
If you haven't been named in the will and you are the next of kin you may have to apply to the court for a letter of administration (more on this in the next section).
You can also engage a solicitor to act on the estate's behalf when dealing with unpaid debts or other parts of the estate.
Need help now? Call the National Debt Helpline on 1800 007 007 to speak to a financial counsellor for free.
Step 1. Let the bank or lender know
Financial institutions usually have deceased estate and bereavement specialists that will help you get someone's accounts in order. Below, we've included contact details for the Big Four banks.
| Bank | Bereavement / Deceased Estate number |
|---|---|
| ANZ | 1800 237 170 |
| Westpac | 1300 130 240 |
| Commonwealth Bank | 1800 686 153 |
| NAB | 1300 911 451 |
Step 2. Confirm your authority to represent the estate
You will need to prove that you are the Authorised Estate Representative. The bank will ask for documents to prove this or a letter from the estate solicitor.
Step 3. Give the bank relevant documents and details
The bank or lender will ask you for a death certificate or other details of the deceased. Usually, you will need to fill in a “deceased estate notification form”. The information you'll need to provide for this form includes:
- Details about you. Your name, relationship to the deceased, address and contact information.
- Details about the deceased. Their name, address, date and place of birth.
- If there is a will. A copy of the will and the death certificate.
Step 4. Request release of funds and close accounts
The financial institution will review its accounts for the deceased's estate. This includes any credit card balances, other debts and savings account balances.
The bank should be able to freeze the credit card account. The bank can provide you a list of regular payments taken from the deceased's bank account, debit card or credit card.
If there are funds available in the accounts, you can request the bank pays off the card balance using these funds.
What do you know about funeral insurance?
Credit card debt can be paid from a mix of sources that are linked to the deceased’s estate, not just savings. Most superannuation accounts, for example, offer some form of life insurance that could cover the cost of debts that need to be paid when the account holder dies.
What if my loved one died without a will?
If you're the next of kin for the deceased but there's no will, then no one is named the Authorised Estate Representative. In this case you could apply to your state supreme court for a Letter of Administration.
This process varies by state but you'll need the original death certificate. If approved, the court will grant you the right to administer the estate and handle their debts and other affairs.
What legal aid numbers can I call for help?
Free, independent legal advice is available through government-run and not-for-profit legal associations. Consider these organisations if you're looking for legal help to deal with a deceased estate. Your bank may also be able to assist.
| State | Legal help |
|---|---|
| NSW |
|
| Victoria |
|
| South Australia | |
| Queensland |
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| Western Australia |
|
| Tasmania |
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| Northern Territory |
|
Who else can I contact for help?
- The Australian Centre for Grief and Bereavement
- The Births, Deaths and Marriages Registry
- Australian Funeral Directors Association
- Beyond Blue
- Lifeline
What if I have a joint credit card with a loved one who died?
If you have a joint credit card account then you will retain total control over the account. And you'll have to pay off the balance as normal.
You can still notify the bank if you wish to remove your late partner's name from the account.
Example: Dealing with credit card debt after the death of a partner
Let's take a look at a scenario for a couple living in Sydney, who we'll call Alex and Jamie. In this scenario, Alex had a $10,000 credit card debt when they died, and a will that left everything to Jamie. Their home was in both their names, and when Alex died, ownership of the property automatically passed to Jamie. This meant the family home was excluded from Alex's will and couldn't be used for any claims by creditors. (Note that the bank could not claim an asset like the family home to cover an unsecured debt anyway).
Alex also had a superannuation balance of about $800,000 in a MySuper account. This fund also included insurance with a death benefit. Alex's solicitor handled the settling of their estate and the $10,000 credit card debt was paid to the bank from the superannuation death benefit. The remaining balance of assets went to Jamie.
Find out how life insurance can help your family cover your debts if you pass away
What happens if the deceased estate doesn't have enough money to pay off the credit card?
Any debts must be paid from the estate before any beneficiaries receive any benefits. This means children or partners may not inherit any money if the debts are greater than the assets.
If the estate doesn't have enough money, after taking into account all the deceased person's assets including superannuation and any life insurance payouts, the estate is insolvent.
Entering bankruptcy
The estate could apply for bankruptcy. If the remaining credit card debt (or other debts) is $10,000 or more, it is possible for the creditors to bankrupt the estate by applying to the court.
It may also be possible to negotiate the unpaid card debt with the bank, or even get the debt waived. In these circumstances it's a really good idea to seek legal advice.
Can I inherit a loved one's credit card debt?
If the credit card debt is from a joint credit card account you shared with the deceased, you're liable to pay the debt. It's your card.
But if you're not a joint cardholder, and there are not enough assets in the estate to pay off the credit card debt, the debt does not pass to you. But you also won't inherit any assets.
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Hi, I am helping to support a lady who is wondering what happens to her credit card debt when she dies – she is currently undergoing cancer treatment. she has no savings or any WILL, she has 2 credit cards that in total owe about $8000. she has funeral insurance which will cover her funeral and leave some. am I right in my thinking that the bank will ask for the money from the funeral insurance to pay off the credit card debt?
Hi Allison,
Thanks for getting in touch and sorry to hear about the lady you’re caring for. Kudos to you for being so nice to her. When she passes, her estate is usually responsible for paying off any remaining debts you have. If the credit card debt is only in the name of the deceased cardholder, the liability will be paid out of the deceased’s estate. If there’s not enough money to cover the cost of the debt, the creditor is likely to offer the next of kin a payment plan or the opportunity write off the debt. If the debt exceeds $5,000, it is possible for the executor, next of kin or creditor to bankrupt the estate.
To help you further, there is free, independent legal advice available in your state through various government-run and not-for-profit legal associations. You can find the name of the organizations and numbers on our page above. Scroll down on the page and find it in the FAQs.
Hope this helps!
Best,
Nikki
I have been separated from my husband for almost twenty years, but not officially divorced. Can I be held liable for any outstanding debts he may have when he dies? Would the law consider me his next of kin?
Hi Lila!
Thanks for your inquiry.
Most of the time, you may only be held liable for your spouse’s debt, if you are a joint accountholder. You may get contact with our specific legal aid representatives in your state, by checking our FAQ on our guide, “What happens to credit cards after death.”
Hope this clarifies.
Cheers,
Jonathan
My husband is the primary card holder. I have the card too & can use it independently. What happens to the outstanding balance should he die. We are pensioners & live in a village with a 45 year lease. Will I or my family be responsible for the debt. We do not have any super or savings
Hi Maggie,
Thank you for your inquiry.
If the credit card is in a joint account, the other primary cardholders will be liable to pay the remaining outstanding balance. If the credit card debt is only in the name of the deceased cardholder, the liability will be paid out of the deceased’s estate. If there’s not enough money to cover the cost of the debt, the creditor is likely to offer you a payment plan or write off the debt.
I hope this information has helped.
Cheers,
Harold
My daughters dad died she is next of kin he has a mortgage of 250000 and credit card debt of 40.000 the house is worth 400000. does it come out of the estate
Hi Caroline,
Thank you for your inquiry.
Basically, if the cardholder dies, the remaining outstanding balance on his card will be paid out of the deceased’s estate. You’d be best to get in touch with the bank to help you with working out this matter. Alternatively, if you want to seek for a free independent legal advice, you can contact the number (in your relevant state) listed in the FAQs section above.
Cheers,
May
Hi there,
My Dads de facto recently passed away quite suddenly and has left behind 15k in credit card debt . They were both pensioners and there is no money left in her estate, the only asset she owned was half of the house they bought together, her will states that the home becomes my fathers until his death.
My father doesn’t have the funds to pay the credit cards and is now worried the credit card companies will force him to sell the only asset which is his home, can you tell me if this is a likely scenario.
Thanks
Hi Christine,
Thanks for your inquiry and I’m sorry to hear about your family’s lost.
If your father happens to be a joint account holder or co-signatory, he will become solely responsible for the debt and should shoulder the monthly repayments. If not, what he needs to do is to immediately contact the credit card company to inform them about his spouse’s death and ask that any interests be frozen so that the debt doesn’t continue to increase.
Although there is no absolute assurance, in case that the debt is greater than the assets left behind, sometimes, the credit card issuer will be forced to write off the debt as a loss. But before they do that, they will still do everything they can that the debt should be paid off. So it’s best that you help your father contact the card company and see what would be their advice and his options as well. He can also prepare a copy of her death certificate if the credit card company would need it.
I hope this could help.
Cheers,
May