Inheriting credit card debt when a spouse dies is a stressful and legitimate concern of partners at any age. When a person dies, his or her credit card debt does not automatically disappear. Whether the credit card company can recover the debt depends on three factors, whether or not the account had a co-signor, the amount of money and property in the deceased spouse’s estate and your state’s law.
First, if the card belonged to the deceased spouse alone and the living spouse was not a co-signor or joint account holder on the account, then the debt belongs to the deceased spouse alone. At death, the deceased spouse’s estate is responsible for paying off the balance of the debt. When the estate goes through probate, the distribution of property after a person’s death, the estate representative will look at the assets and debts, and according to the law, will determine the order in which to pay off the outstanding debt. If there is remaining assets after all debts are paid, the property will be distributed according to the deceased’s will or by state law if no will was in place. There are some states, California being one, that hold that a spouse can be liable on the credit card. If the surviving spouse were to received benefits from the use of the card, then they can be held liable for it. Otherwise, if the credit card debt amounts to more than the deceased’s total estate and there was no co-signor or joint card holder, the credit card company must write off the debt. The company cannot legally come after a living spouse to force payment on the account if he or she was not a joint card holder.
In 2009, the Credit Card Act was adopted, putting a stop to credit card companies from accumulating additional fees once notified the card holder had died. Furthermore, the Fair Debt Collection Practices Act (“FDCPA”) protects the living spouse from being harassed by collectors who can often make the living spouse feel an obligation to pay when the reality is he or she has no legal obligation.
So, when opening a credit card account alone, you are responsible to pay back the debt and you sign a contract requiring you to do so. Upon death, it is not your spouse or family that is required to make the payment on your behalf, but your estate. It is important to be aware of your rights as there is no guarantee that the credit card companies and/or collection agencies won’t try to receive payment from you on your deceased spouse’s behalf.
If you are having problems with debt, contact SmithMarco P.C. for a free case review.