When a loved one dies, how to handle their debts won't be the first thing on our minds. But at some point it will come up, and it's important to know that support is available. If you're wondering about credit card accounts, here we explain what happens to them, how to deal with any card debt and deceased estate services that offer help.
What happens to credit card debt after death?
When someone dies, their estate is usually responsible for paying off any remaining debts. This includes credit card debt when the account was held in their name, which means the liability would be paid out of the deceased's estate. For joint account credit cards, the other primary cardholder would be liable to pay the remaining outstanding balance.
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 to 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.
Need help now? Call the National Debt Helpline on 1800 007 007 to speak to a financial counsellor for free.
Secured and unsecured debt
The type of debt someone has can have an impact on how it's managed when they die. Here's a breakdown for the 2 main types of debt:
Unsecured debt. A credit card is a type of unsecured debt because it's not usually tied to an asset (such as your car or home). This means if a debt is unpaid and remains unpaid, the bank has to go through court to access your estate and any assets that it could then use to cover the cost of your debt (if the court ruled in its favour).
Secured debt. A mortgage is an example of secured debt that is tied to an asset, such as a house. If someone defaults on their home loan repayments, the lender is within its rights to reclaim possession of the house to recoup the cost of the loan. If the default is due to a death, the lender may offer support and other alternatives, so contact it as soon as you can.
How to deal with credit card debt if a spouse or relative dies
There is a lot to think about when someone dies, and money matters can add to the stress. If you're not sure where to start, below are some simple steps you can take to deal with a deceased family member’s finances.
If you want contact numbers for legal aid representatives, we've included details for each Australian state and territory in the frequently asked questions section.
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. Give the bank relevant details and documents
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.
If there is no will. Something to prove you’re the next of kin such as a solicitor's letter.
Step 3. Wait for the bank’s assessment
The financial institution will review its accounts for the deceased's estate. This includes any credit card balances, other debts and savings account balances.
If there are outstanding debts, the bank will see if they can be paid off with available assets from other accounts. This includes accounts held by the deceased outside of the bank’s network, such as their superannuation funds.
Step 4. Arrange the release of funds and any debt payments
If there are enough funds to cover the deceased’s credit card debt, the bank will pay the liability first and release any leftover funds to the beneficiaries. If the deceased’s assets are less than the amount owing, the financial institution may contact you to arrange a payment plan.
This usually involves a freeze on the interest rate so that interest charges stop compounding. In some circumstances, the bank may write off the debt. If the debt is more than $5,000, the executor, next of kin or creditor can request to bankrupt the estate.
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.
Example: Dealing with credit card debt after the death of a partner
To help put this in perspective, 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.
Remember: You have support and different options available if you need to close accounts or deal with credit card debt after the death of a spouse or relative. If you have specific questions or want guidance for your situation, a good first step is to contact your bank or legal aid to discuss your options.
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.
If the deceased has not left a will, you will need to apply for a letter of administration or probate to prove you’re the next of kin and eligible to administer the deceased’s estate.
What about joint bank accounts?
If you have a bank account in a joint name, ownership of the account will be transferred to your name once the financial institution receives notification about the deceased.
How do I get the probate grant?
Apply for the grant of probate through the Supreme Court. You must have this document if you’re dealing with estates greater than $50,000 in value.
Amy Bradney-George was the senior writer for credit cards at Finder, and editorial lead for Finder Green. She has over 16 years of editorial experience and has been featured in publications including ABC News, Money Magazine and The Sydney Morning Herald. See full bio
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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
Finder
JonathanJanuary 28, 2015Finder
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
KrishnanJanuary 28, 2015
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
Finder
JonathanFebruary 3, 2015Finder
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
JoshJanuary 14, 2015
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
Finder
JonathanJanuary 14, 2015Finder
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
rickJanuary 2, 2015
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
Finder
ElizabethJanuary 5, 2015Finder
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
GlenDecember 11, 2014
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.
Finder
ElizabethDecember 11, 2014Finder
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
RobbieNovember 20, 2014
How long after probate is completed can a credit card company demand payments that nobody knew existed
Finder
ElizabethNovember 21, 2014Finder
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
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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