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Collecting credit card debt after the debtor dies

On Behalf of | Dec 24, 2021 | Creditor Claims |

After someone in California dies, it is very common for them to leave behind significant credit card debt. Then the credit card company must decide whether to pursue a claim on the debt.

Because California is a community property state, if the deceased is survived by a spouse, the spouse assumes responsibility for the debt. Or if the account had a cosigner, that party would be the one to pay it off. But if neither of these things is true, the credit card company would have to go to probate court.

Unsecured debts and California probate law

Unfortunately, the company will likely be at the back of the line of creditors. Unsecured debts like unpaid credit card debt are the lowest priority under California probate law. That means that creditors with secured debt, like a mortgage or lien, get their claims addressed first. Next comes things like funeral and “last illness” expenses and wage claims from employees. Whatever is left after these higher-priority claims can be sought by the credit card company, but in many cases there might not be enough left to make the expense and effort of pursuing a claim worthwhile.

Of course, each case is different. The size of the estate and the debt may make it good business to file a claim against the estate or pursue it from the person taking over the debt. A settlement might provide you with a substantial portion of what you are owed and settle the matter. Or you can go to court if the executor or debt assignee will not be reasonable.