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Who Is Legally Responsible for Credit Card Debt After Death?

When a loved one passes away, it is a difficult time with many decisions that must be made related to funerals, burial and disposing of their belongings. When creditors begin to call to collect on the deceased person’s debts, the loss of a friend or family member becomes even more stressful. Before paying those debts, it is important to know how the law views those debts after someone dies.

ARE FAMILY, FRIENDS OR HEIRS RESPONSIBLE?

Even tough family, friends or heirs may inherit the assets of someone who has died, they do not inherit any debts that are in their name alone. If there are any assets after someone dies, they are usually placed in an estate. A creditor may file a judgment against an estate in order to collect debts, but if there are not enough assets to pay debts, the heirs are not responsible for paying them. This will not stop creditors from contacting family members in an effort to collect, however.

All creditors should be referred to the deceased person’s executor. If there is no estate, the family members may instruct the creditor that they are not responsible and that they should no longer be contacted regarding the debt. Unfortunately, spouses who live in a community property state, may be required to pay debts that are solely in the name of the deceased spouse. Community property states include:

Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas & Wisconsin

In some cases, community property laws apply in Alaska as well.

JOINT ACCOUNTS

Accounts that are held jointly become the responsibility of the person who is still living, regardless of who used the account. For example, if a husband and wife have a joint credit card that only the wife uses, should she pass away, the husband is still responsible for paying the debt.

The same is true for co-signers. If someone co-signs a loan with a family member and that family member dies, the co-signer is then responsible for paying the loan. However, anyone who is an authorized user or an additional cardholder on a credit account is not responsible for repaying the debt after someone dies. Because the authorized user or additional cardholder did not originally apply for the debt and were only permitted to use the account, they cannot be held liable for the debt after the cardholder passes away.

STOP USING ACCOUNTS

Many people do not realize that, as soon as someone dies, they must stop using all accounts that are solely in the name of the person who is deceased. Even authorized users on credit card accounts cannot use the account once the person is deceased or they risk being charged with fraud. Even checking or savings accounts that are only in the person’s name should not be accessed after death.

The loss of a loved one is stressful and devastating. Having creditors contacting their friends and family adds significantly to the stress and grief. After the death of a friend or family member, it is important to contact an attorney who can help guide you through the estate process. Give us a call or complete our contact form in order to begin managing your loved one’s estate.

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