For some Americans, the financial question that lingers after a loved one’s death isn’t “What am I going to do with all this money?” It’s “Do I have to pay this credit card debt?”
It’s possible that left-behind credit card debt could be your responsibility. But quite often it isn’t.
It’s fairly common for survivors to believe that they’re on the hook for a deceased family member’s credit card debt when in fact they are not, says Michaela Harper, director of community education at the Credit Advisors Foundation. Debt collectors might even try to give survivors this impression. But Harper cautions against taking on debts that aren’t your own. “You’re not helping your loved one by impoverishing yourself and clearing debts you’re not obligated to clear,” she says.
When it’s your responsibility
There are a handful of legal reasons you might be responsible for a deceased person’s debts. But when it comes to credit card debt, they mostly boil down to two:
- You applied for the account with the decedent. “If you’re a co-signer or joint account holder, you, the survivor, have the responsibility of repaying the debt,” says Bruce McClary, vice president of communications for the National Foundation for Credit Counseling. Authorized users on an account, however, generally aren’t liable for these debts.
- You’re the decedent’s spouse, and you live in a community property state.In this case, you might be responsible for your deceased spouse’s debt, McClary says. But you wouldn’t be liable for your spouse’s “separate debts,” the debts he or she acquired before your marriage.
If you’re a joint account holder or co-signer, notify the card issuer of the account holder’s death. Send a certified copy of the death certificate. Also, “it’s important to ask what other documents they might require to update their records,” McClary says. Consider moving the debt to a 0% balance transfer APR credit card so you can pay it down interest-free.
If you live in a community property state but aren’t named on the account, consult a lawyer about your liability for the debts or seek free help at alocal legal aid center.
When it’s not your responsibility
Creditors and collectors can’t compel you to pay a debt that’s not legally your responsibility. But they might imply that you have an obligation to pay, Harper says.
“They’ll say things like, ‘Where do you want us to send that bill so it’s easier for you to pay?’” or they may say that the unpaid debt will be reported to the credit bureaus, she says. Don’t agree to pay debts that aren’t your responsibility, Harper says.
If the deceased person was the only one responsible for the debt, then repaying it becomes the responsibility of the person’s estate. Hand the credit card debt off to the executor of the estate — the person tasked with settling the person’s financial affairs — and let him or her deal with the creditors.
Managing the estate? Tips for handling credit card debt
If you’re the executor of your loved one’s estate, or a court-appointed administrator, you’ll be the main point of contact for the deceased person’s creditors. Here’s how you can navigate that responsibility.
Order certified death certificates. Notifying multiple creditors about your loved one’s death means sending a certified copy of the death certificate — not a simple photocopy — to each issuer’s correspondence address.
You can get these certificates through your state’s vital records department, usually for around $20 each. Send the certificate via certified mail with an old credit card statement, to make sure it gets linked to the right account. Let the creditors know whether the estate is going through probate. If paying for the certificates could pose a hardship, start with a few creditors and ask them to return the certificates, so you can reuse them.
Gather information. “The first thing you do is sit down and go through all their paperwork,” says Ira Rheingold, executive director of the National Association of Consumer Advocates. To make sure you know about every credit card account, look at the person’s credit report, he says.
Request credit reports from the three major credit bureaus — Experian, Equifax and TransUnion — by sending a certified death certificate and the other documents each bureau requires. Notifying the bureaus of the death will also update the decedent’s credit file and protect against fraudsterstrying to apply for credit in that person’s name.
Verify debts before the estate pays them. “We’ve seen enough horror stories” about collectors sending bills in the wrong amount or contacting the wrong person, Rheingold says. Before using the estate’s money to pay the debt, ask the company to verify that it belongs to the deceased and provide a breakdown of the accounting. Don’t pay debts you can’t verify.
Know your rights. Under the Fair Debt Collection Practices Act, you can send collectors a written request to stop calling you, and they have to honor your request. If a collector harasses you, Rheingold recommends reaching out to your state’s attorney general or filing a complaint with the Consumer Financial Protection Bureau, as it might violate federal law.
Don’t pay the estate’s debts out of your own pocket. If the estate doesn’t have enough money, the executor can simply deny a creditor’s claim. The creditor has the option of appealing that decision in probate court. But generally, “That’s a loss the credit card company or debt collectors have to bear,” Rheingold says.