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 Authorise 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 |
|
| West Australia |
|
| Tasmania |
|
| 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 with MySuper fund. 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) exceed $5,000 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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My niece an Australian citizen and Indian origin lady in mid thirties with two kids of 7 and 9 years lost her husband a couple of months ago. At the time of his death he had a saving of around 2000 dollars in bank account and a credit card due of almost 18000 dollars. As estate he has only a car worth around 4000 dollars. Other than those only household items like sofa, fridge, washing machines and utensils are his assets. My niece got insurance from the superannuation fund based on a Letter of Administration of Supreme Court and the fund is now lying in a NAB Account on her name. What is the extent of liability of his wife and children towards the credit card dues? I understand that Insurance funds are protected from credit card dues. Is the Solicitor acting as an administrator take possession of the car and sell it without the consent of my niece. ?Kindly advise. Krishnan
Hi Krishnan,
Thanks for your inquiry.
Credit cards are an unsecured form of credit, the card issuer shouldn’t chase a family member over a loved one’s credit card debt. There are some cases where those left behind will be liable for your credit card debt, and those cases are where you have had a joint account or co-signatory. Where your account has been joint, as soon as one of the account holders dies the remaining account holder will automatically become solely responsible for the debt. If the deceased’s estate is sold and their are not enough funds to pay unsecured creditors, the debt can go unpaid. The deceased’s family can not be held liable for these debts.
I hope this helps.
Cheers,
Jonathan
Hi Jonathan,
Thanks for the inputs on credit card recovery of the deceased and the extent of liability of the spouse this being an unsecured liability. Another fundamental question is, can the only asset of the deceased i.e an old car being used by is wife and her two young girls be taken away by the credit card company as a part f recovery of dues. She works in an office and has two daughters aged 7 and 12 years studying in two different schools, where this is their only mode of conveyance. Kindly clarify.
Regards
Krishnan
Hi Krishnan,
Thanks for your inquiry.
Unless the debt has been secured against any assets, loved ones will not be held accountable for the debt. You may refer to our guide on credit card debts after death.
I hope this helps.
Cheers,
Jonathan
Hi,
My father died with debts on two credit cards. One with about $3000 owing on it and another with $13500 owing on it.
After paying out funeral costs he has 3800 left over which will not cover all his debts.
Do both banks just write this off? Or will the $3000 credit card need to be paid out first and the second written off?
Thanks
Hi Josh,
I am sorry to hear about your loss, thank you for your question.
It is important to note that the credit card company should be contacted immediately and informed that a family member is deceased. Certain credit issuers allow interest free payment options for a specified period if an eligible person takes over the account. The Credit Card terms and conditions of each credit issuer will give guidance for managing deceased accounts with a contact number for further inquiry.
In cases where the debt is greater than any assets left behind sometimes, the credit card company will be forced to write off the debt as a loss.
There are some cases where those left behind will be liable for the credit card debt, and those cases are where there is a joint account or co-signatory. Where the account has been joint, as soon as one of the account holders dies the remaining account holder will automatically become solely responsible for the debt.
I hope this has helped!
Cheers,
Jonathan
Hi my brothers wife has just passed , and she has left him with a credit card debt of more than $7000.00 , my brother has no assets , nor any money in the bank , he lives in a housing trust , and lives on a pension , is he responsible for the debt thank you
Hi Rick,
Thanks for your question.
If his wife was the primary account-holder, any assets or property she directly owned (her estate) may be liable to pay off the debt. Your brother may want to seek legal advice to find out his responsibilities regarding this debt, and what, if any of it, he has to repay. There’s a free legal hotline for NSW that can be reached on 1300 888 529. If you’re from another state, you can search ‘legal aid (your state)’ to find the relevant number to call.
I hope this will help.
Thanks,
Elizabeth
My brother died with 4k cash in a bank account and 11k c.c. debt and nothing else. now a funeral bill of 7k….does the executor get first go at the cash to pay funeral costs and then the cc provider would have to write off the debt provided the circumstances are exactly as stated.
Hi Glen,
Thanks for your question.
The role of the executor is to decide how to distribute the funds, but usually the cash would be used to pay off any outstanding debts first. Property and other assets can also be sold to cover these debts. If you have further questions you may want to direct them to the executor of the estate as they will be distributing the funds.
I hope this has helped.
Thanks,
Elizabeth
How long after probate is completed can a credit card company demand payments that nobody knew existed
Hi Robbie,
Thanks for your question.
There really is no one easy answer for this, because card issuers could be attempting to chase up debt for a lengthy amount of time. You will usually receive a letter quite quickly after the fact, but if they fail to get in contact with you the process may be drawn out.
I hope this has helped.
Thanks,
Elizabeth