Can credit card debt bankrupt surviving family members?

by | Aug 22, 2019 | Bankruptcy

Statistics show three out of every four people will die in debt, and credit card bills don’t go away just because a person dies. In some cases, those debts can be passed along to a deceased person’s loved ones here in Texas.

Assets from an estate are used to pay off debts, including credit cards. However, paying off that debt can leave heirs with little or no inheritance and even more concerning is when survivors are burdened with paying off that debt, which in some cases can lead to bankruptcy.

Survivors can be responsible in some instances

In most states, relatives aren’t typically responsible for someone else’s debt. However, there are exceptions, such as:

  • Co-signing for a credit card or loan
  • Jointly-owned property
  • State laws requiring certain payments to settle an estate

Community property laws

Texas is one of nine states where debt accumulated during a marriage is considered community property and belongs to both partners even if an account isn’t in the surviving spouse’s name. This law applies regardless of whether a marriage ends in death, annulment or divorce.

Protections exist for family members burdened with debt

Having an estate plan can keep credit card debts from overwhelming other family members. However, debt collectors may continue to hassle survivors over a deceased loved one’s financial obligations, even if they aren’t responsible for paying off those accounts.

Consumers are protected by the federal Fair Debt Collection Practices Act, which attempts to crack down on abusive and deceptive contact from debt collectors.

Seek experienced legal help to deal with inherited debt

If someone’s financial future is in jeopardy due to credit card or other debt passed along here in Texas, consulting with an attorney who specializes in bankruptcy laws can find solutions. Bankruptcy attorneys focus on options, including Chapter 7 and Chapter 11, which can help a person who is weighed down in debt to regain control of their finances.