Who is responsible for credit card debt if somebody dies? Or does the company eat it?
January 19, 2009 - Say somebody has X amount of credit card debt, then they die but still have that debt to the credit card company outstanding, what happens? Does the company have to write it off as bad debt or ? Perhaps the company can hit up that person's estate. But let me pose another question then - what if that person's estate does not have enough money to cover that credit card debt.
Everyone who answered is partially right. I do credit card collections on deceased people. First & foremost, the estate is the main responsible entity, IF one is filed. Then it moves down to the spouse, ONLY IF IN A COMMUNITY PROPERTY STATE & then they can be held only equally responsible, as in 50/50 responsibility with the deceased. Yeah, that means a $10,000 balance your mom had in California, your dad is only responsible for $5000 of it. Here is the good news. After that, unless you are a joint on the account, NO ONE ELSE IS RESPONSIBLE!!! We have 100's of accounts a day we call about & the family doesn't care enough to do anything for the debts of the deceased so we just send back to the original creditor with notice the family won't pay on it. This is why everyone pays so much interest on their credit cards. It makes up for the money lost when families refuse to honor the debts made by their deceased loved ones. We are actually willing to work with anyone who wants to make arrangements on the accounts people leave behind and we are contracted on. Heck, the other day, I set up $20 a month payments on a $10,000 account. They claimed it was the best they could do but the person had taken care of them so it was their moral responsibility, even though not a legal one.
The person's estate has to stand good for what he owes. If the estate doesn't have enough, then the entire inheritance is sold, given to the credit card companies, and then the rest of the debts are cancelled (the credit card company has no choice but to write it off.) Which is why, even if the person has a perfect FICO score, that the banks are taking some risk when loaning money.
I just had to post up to ask Biddix this. You say you accepted a $20 a month payment on a $10,000 debt? What you didn't tell people here is that now you've reset the statue of limitations for that debt and can come after that kind person for the full 10k right? Works just like those $5 "good faith" payments you collection agents so like to use to do the same thing on debts that are past the statue of limitations. See kids, this is why we're here preaching that collection agents are evil and teaching you your rights and how to fight them. Don't ever be a victim of their guilt trips or being "noble" and settling deceased loved ones debts. They have no idea what it means to be noble.
- The estate.
After a person dies, the estate will liquidate("sell") all of that individual's property. Regardless of a will, creditors will always be paid first before any division of property pursuant to a will. If there isn't enough to pay all the creditors some will just have to write off the difference as a loss.
Surviving spouse has to pay, when my sister passed away in /dec 2006, and of course he Dec payment wasn't made or her January when the credit card compay called we told him of her passing and immediate sent the bill to the estate lawyer, and her husband had to pay off the credit in full. He wasn't even on her credit card account. Served him right.
Knowledge Base: Credit Card Processing
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