Who's responsible for debts after a death?

Credit Card Debt after the Death of a Spouse

by Bill Hardekopf

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When a spouse dies, the surviving mate may be burdened with more than just grief and loneliness. Credit card debt may also haunt the partner that is left behind.

The responsibility for the credit card debt of a deceased spouse will depend on the type of account it was and, in some cases, where you live.

When the Estate Pays

If a credit card was just in your deceased spouse's name, the debt only belongs to your spouse (there are exceptions to this in community property states). The estate, not family members, is responsible for paying off the balance. The executor of the estate will use the assets to pay off the debt. If the estate doesn't have the money to pay the card's balance, then the credit card company must write off the balance and the account is closed. A card company can't legally force someone else to pay.

Neither an authorized user on the account nor a second cardholder who has charging privileges is responsible for the remaining debt when it is not a joint credit card account.

When the Survivors Pay

If the card is a joint account, then the surviving spouse is liable for the balance on that card, along with or instead of the estate.

You could also be responsible for the debt if you live in a community property state. 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 have a community property law include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Sometimes the surviving spouse will only have to pay the debts that he or she benefited from, such as food, utilities, and health care.

After the Funeral

After your spouse dies, you or the executor of the estate must notify all creditors that the account holder has died, even if an 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. According to the Credit Card Act of 2009, no new late fees or annual fees can be added to the bill while the estate is being settled. Furthermore, once the credit card company has provided the final balance, the estate will have a 30-day window where the balance can be paid in full and additional interest charges can be avoided.

Expect creditors or collection agencies to call. If there is money in the estate, they may go after it and pressure you for payment. Refer these calls to the executor of the estate if there is one. If not, don't answer any questions 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 the debt is not past the statute of limitations (three to six years, varies by state and situation). If they continue to pursue collection on debt that you are not responsible for, file a complaint with the Better Business Bureau and the Consumer Financial Protection Bureau. In addition, you may need to hire a lawyer to fight the actions of a credit card company or collections agency.

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If you must assume payments for the debt, begin paying immediately so you aren't hit with late fees and lose points on your credit score. If you don't have the money to pay, contact the credit card company 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.

Identity protection and the monitoring of credit reports are still important, even after death. Send a letter to the three major credit bureaus (Equifax, Experian and TransUnion) to alert them of your spouse's death. Request that the statement "Do not issue credit" be added to your spouse's credit report. Ask to be notified if there are any attempts to open new accounts in your spouse's name.

Bill Hardekopf is CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card.

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