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Credit Cards: Who Owes Debt if Spouse Dies?

Credit cards: Know how to protect yourself from creditors in case your spouse passes away.

NEW YORK (TheStreet) -- The death of a spouse is one of life's most difficult times. It becomes even harder if the surviving spouse is not fully prepared to handle the family's finances.

Financial experts encourage couples to talk through all financial matters, including how to handle finances if one mate passes away.

When is a surviving spouse not responsible for credit card debt?

If a credit card is only in your spouse's name, the debt belongs only to your spouse. (There are exceptions to this in community-property states). Family members will not be responsible for the debt or be forced to pay it. Even as a second cardholder on the account who has charging privileges, you are not responsible for the remaining debt when it is not a joint account.

If the card is only in your spouse's name, the estate is responsible for paying off the balance. The executor of the estate will use the assets to pay off the debts. If the estate doesn't have the money to pay the bill, then credit card companies must write it off and the account is closed.

There are several instances when the surviving spouse is responsible for the credit card debt.

If the card is a joint account, this means your name is also listed on the account and the card is reported on your credit report. You will be responsible for the debt after your spouse dies.

In addition, if you live in a community-property state, you could also be responsible for the debt. Assets that are gained together during marriage are classified as joint property in these states. This can also apply to debt. Debt gained together during marriage is considered joint debt and the surviving spouse is responsible. Rules vary by state. States that use common property laws include: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Sometimes thesurviving spouse will only have to pay the debts that he or she benefited from, such as food, utilities and health care.

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After your spouse dies, either you or the executor of the estate must notify all creditors that the account holder has died, even if the account was only in your spouse's name. Find out where to send a copy of the death certificate and include a note with the account number. Send it by certified mail so you have proof that it was sent. Keep a copy of the letter for your records.

If the estate of the deceased spouse has cash or assets, the executor will decide how these will be used to pay off debts before inheritance is distributed to heirs. You may have to pay a portion of the balance along with the estate. If there are no assets in the estate, you are responsible for paying off the debt.

Expect creditors or collection agencies to call. If there is money in the estate, they will go after it and may pressure you and attempt to bully you for payment. Refer all questions about payment to the executor. Don't answer questions about this until you know what assets you have, what you are responsible for, and what bills must be paid. If collection agencies or credit card companies start calling, make sure the debt is valid, that you are responsible for it, and it is not past the statute of limitations(three to six years, varies by state and situation). If they are pursuing debts that aren't valid or that you shouldn't be responsible for, it may be necessary to hire a lawyer to fight the actions of a credit cardcompany or collections agency.

If you must assume payments for the debts, but don't have the money, immediately contact the credit card companies to work out a payment plan. They may accept a portion of the payment to close the account. This is another issue where it may be helpful to have an attorney working for you. Seek legal advice from someone who specializes in estates, wills and trusts.

Experts suggest certain measures to protect yourself and your spouse, such as paying off debts as quickly as possible, making sure both partners are informed, and also having a credit card in your own name to establish strong individual credit.

-- Reported by Bill Hardekopf of

Bill Hardekopf is the chief executive officer of

, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."