When someone dies, their surviving spouse may face more than loneliness and grief. If the partner left behind debt on a credit card, the surviving spouse may also have to deal with that.
Whether the surviving spouse is responsible for the debt depends on a few things, including the account type and state of residence.
When the Estate is Responsible for Debt
If the credit card was only in the deceased spouse’s name, then the debt belonged to that person alone. In this case, the estate, not surviving family members, is responsible for settling debts. The estate’s executor will use assets to pay off debt, and if the estate does not have enough money to pay off the credit card debt, the company will have to write off the balance and close the account. Except in community property states, the credit card company cannot legally force surviving family members to pay the debt.
Authorized users and secondary cardholders will not be held responsible for the debt, as long as it is not a joint credit card account.
When Survivors are Responsible for the Debt
If the deceased and the surviving spouse shared a joint credit card account, the surviving person is liable for the balance, along with or in lieu of the estate.
If you live in a community property state, such as Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, you may also be held liable for the debt. In these states, all assets gained during marriage are classified as joint property, and this can also apply to debt. Debt accrued during marriage is generally considered joint, and the surviving spouse will be held responsible, but the exact rules vary by state. In some cases, the surviving spouse will only have to pay the debts for items from which they benefited, such as health care, utilities and food.
After the Funeral
After your spouse’s death, you or the estate’s executor must contact all creditors to let them know the account holder has died. You must do this even if your spouse was the only account holder. You will need to ask each creditor where to send a copy of the death certificate, and when you send it, make sure you include a cover letter with the account number listed. You will want to mail it via certified mail so you have proof you notified the issuer, and you will want to keep a copy for your own records.
While the estate is being settled, no new annual or late fees can be added to the balance, according to the Credit Card Act of 2009. Also, once the issuer has provided the final balance, the estate has 30 days to pay the balance in full to avoid further interest charges.
Even though this is a difficult time, you will need to prepare yourself, as collection agencies and creditors may call you. They may go after any money in the estate and pressure you to make a payment. If there is an estate executor, you will want to refer these calls to them. If there is not, do not answer any questions until you know exactly what assets you possess, for what you are responsible and what bills need to be paid.
If credit card companies or collection agencies start calling you, verify the debt is valid, that you are responsible for it and that the debt is not past the statue of limitations (three to six years, depending on your state and situation). If they continue to contact you about debt for which you are not responsible, you can file a complaint with the Consumer Financial Protection Bureau and the Better Business Bureau. You may need to hire an attorney if a card issuer or collection agency tries to take you to court.
If you are responsible for any remaining debt, you will want to start paying right away so you do not have to pay late fees or take a hit to your credit score. If you do not have the money to make minimum payments, try to work out a payment plan with the credit card company. They may accept a portion of the amount due to close the account. You may also want to hire a lawyer. If you do seek legal advice, contact someone who specializes in trusts, estates and wills.
Even though your spouse is gone, you will still need to worry about identity theft. Contact the three major credit bureaus, Equifax, Experian and TransUnion, to report your spouse’s debt. Ask that they add, “Do not issue credit” to your spouse’s credit report, and ask that they notify you if someone attempts to open an account in the deceased person’s name.