Your unsecured (credit card) debt dies when you die (usually)

[Peter]

Curious, thanks for the clarification.

I see that you wrote:

Originally Posted by JustCurious

you can transfer the property to a trust

Umm, exactly, that is what I did several years ago. So trusts do have a place, I think.

Peter

[simple girl]

Originally Posted by FinanceDude

Since I am LIVING this as we speak, I will comment:

My sister owes MORE than the amount her estate is worth. Do I feel obligated to pay back her debts? Yes, as I am an ethical person. However, do I like the way the CC companies treat me, using various forms of harassment, cajolement, threatening, etc to collect those funds? NO!! Keep in mind, this is my SISTER's assets, not my WIFE'S!!!

So I have become a little bitter with all CC companies, the ones who keep calling and asking when they can expect payments, etc.....the ones that keep calling and asking for my sister when I sent them death certificates 5 months ago...........those lovely folks that called me on X-mas Eve and asked for her..........those "nice folks".......... :P :P

So, part of my ethical self says screw them, I hope they get nothing..........

That is just horrible. In this case I would not be paying them their $.

I can't imagine the trauma this causes you. I thought it was bad enough that I'd get cigarette coupons in the mail for my Mom (she had emphysema).

Ever consider changing your number?

[WM]

Here's another wrinkle, which could use some clarification.

My FIL passed away with substantial CC debt, and was the primary accountholder on all the cards.

My MIL was an authorized user on said cards. They show up on her credit report.

The original agreements on the cards don't mention authorized users being liable, only the primary accountholder. Ethics aside, is she still not liable?

Second question, if she's not liable and doesn't pay them off, what's going to happen to her credit? Does that hurt her as an authorized user on the accounts?

[Goonie]

Originally Posted by HaHa

Just Curious, I very much appreciate this information. My ethics extend to individuals who would at least possibly have similar ethics toward me. However, since I know CC companies, universities, hospitals, etc. would happily render the decedent’s carcass and sell the grease, I would have ZERO problem about telling them to get stuffed in the situation you describe.

Score one for the home team!

Ha

I agree! The CC companies know the risks involved with making unsecured loans....just like us investing.....sometimes ya win...sometimes ya lose....the fees (interest) they charge make up for their 'losses'. IMHO

Personally, when I kick the bucket....I don't give a rat's *ss whether any possible outstanding bills get paid!!! I do have ethics, but it's really hard to use 'ethics' and 'CC company' in the same sentence.

Several years ago I read the book "Die Broke", and the one statement I really liked in it was to the effect of, "The last check that you right should be to the undertaker......and it should bounce due to lack of funds"

[JustCurious]

Originally Posted by WM

Here's another wrinkle, which could use some clarification.

My FIL passed away with substantial CC debt, and was the primary accountholder on all the cards.

My MIL was an authorized user on said cards. They show up on her credit report.

The original agreements on the cards don't mention authorized users being liable, only the primary accountholder. Ethics aside, is she still not liable?

Second question, if she's not liable and doesn't pay them off, what's going to happen to her credit? Does that hurt her as an authorized user on the accounts?

1. She is not liable.

2. Nothing should happen. She did not agree to be responsible for the debts, therefore, they should not report her as being delinquent.

[WM]

Originally Posted by JustCurious

1. She is not liable.

2. Nothing should happen. She did not agree to be responsible for the debts, therefore, they should not report her as being delinquent.

Exactly what I wanted to hear!

JustCurious, are you a lawyer? How do you know this stuff?

Thanks for your help!

[youbet]

Originally Posted by JustCurious

1. She is not liable.

2. Nothing should happen. She did not agree to be responsible for the debts, therefore, they should not report her as being delinquent.

Way, way back in this thread, in fact on the original thread, I said DW was joint with me on our cards. You said we would be responsible for each other's CC debt at death because of the joint status. This post caused me to go look at the paperwork. Actually, I have three cards (Am Exp and two Visa) where the cards are in my name and she is an authorized user. She has one card in her name and I am an authorized user. No joint cards. As long as we each use a card that's in our own name, and not one where we are an authorized user, that would put us in a situation to advantage of this?

As far as the eithics go......... For me, intent would come into play. A person dies, their estate passes without probate and the credit card company eats the amount due on the final bill. No problem. Or....... a person is ill, near death. An authorized user on the card quickly charges it up to the limit to take advantage of the law to their benefit. I'm not so sure that's something I'd be comfortable with. But, to each his own.

In our case, until something dramatically changes in our lives, we pay our CC bill each month. The amount of our bill represents an insignificant percentage of our net worth, so this is really just an interesting academic discussion. However, it's clear that it could be very important to a surviving spouse with low net worth facing a mountain of CC debt from the deceased spouse.

[JustCurious]

Originally Posted by WM

Exactly what I wanted to hear!

JustCurious, are you a lawyer? How do you know this stuff?

Thanks for your help!

Yes, I am a lawyer.

In re-reading your post, you said the credit cards showed up on her credit report. That either means that she did agree to be responsible for the debt, or the credit card company thinks she is. I am not an expert on the rules regarding reporting to credit reporting agencies, but it seems to me that an authorized user only (and not a signatory to the account) would not be reported to the credit agencies, although someone with more knowledge on that issue may correct me. Since they reported the debt to her credit report, then they might also report her delinquency to the credit agencies. Note that I said they "shouldn't" report her, not that they wouldn't report her. Credit card companies often do things that they are not supposed to do.

[WM]

Originally Posted by youbet

Way, way back in this thread, in fact on the original thread, I said DW was joint with me on our cards. You said we would be responsible for each other's CC debt at death because of the joint status. This post caused me to go look at the paperwork. Actually, I have three cards (Am Exp and two Visa) where the cards are in my name and she is an authorized user. She has one card in her name and I am an authorized user. No joint cards. As long as we each use a card that's in our own name, and not one where we are an authorized user, that would put us in a situation to advantage of this?

Be careful of American Express - read the original agreement you signed. One of the cards my FIL had was AmEx and it specifically says the Authorized User is responsible for his or her own charges if the Accountholder doesn't pay.

Originally Posted by JustCurious

In re-reading your post, you said the credit cards showed up on her credit report. That either means that she did agree to be responsible for the debt, or the credit card company thinks she is. I am not an expert on the rules regarding reporting to credit reporting agencies, but it seems to me that an authorized user only (and not a signatory to the account) would not be reported to the credit agencies, although someone with more knowledge on that issue may correct me. Since they reported the debt to her credit report, then they might also report her delinquency to the credit agencies. Note that I said they "shouldn't" report her, not that they wouldn't report her. Credit card companies often do things that they are not supposed to do.

Did some more looking around on the web and it seems that, as you suggest, "won't" and "shouldn't" are two different things. CC companies are allowed to report on authorized users even though they aren't liable, and it appears that they do, for better and worse. The apparent solution, if we can pull it off, is to call each CC and ask that she be removed as an Authorized User on the account. The challenge is to have them report the change to the credit bureau in a timely way, and before they figure out that the debt will not be repaid due to my FIL's insolvent estate. Otherwise we will have to argue with them after the fact. We will also apply for a CC in her name quickly, in case her credit is going to be wrecked by this, even temporarily.

Ethics-wise, I have no problem with this. The CC companies fully understand what they are getting into with consumers and they have undoubtedly made thousands off my FIL over the years. They don't have the right to harass my MIL about it, and I'm not going to cry for them or feel bad because the gravy train's over.

[youbet]

Originally Posted by WM

Be careful of American Express - read the original agreement you signed. One of the cards my FIL had was AmEx and it specifically says the Authorized User is responsible for his or her own charges if the Accountholder doesn't pay.

Thanks. Acutally I have no plans to structure CC to guarantee some benefit to the surviving spouse at the time one of us dies. For us, that would be focusing on pennies when there are dollars to be saved. However, I understand that in the case you're involved with, the CC debt has already been run up and you're trying to help MIL.

I wonder, is the debt all due to FIL. Or did MIL use her card for this account and sign for some of it?

[HelpMeRhonda]

What about the back owed taxes. Did I not read these exist as well ?

Sorry, wrong thread...

[JustCurious]

Originally Posted by WM

Be careful of American Express - read the original agreement you signed. One of the cards my FIL had was AmEx and it specifically says the Authorized User is responsible for his or her own charges if the Accountholder doesn't pay.

I don't see how that can be enforceable. What if AMEX said that your neighbor would be responsible if you don't pay, would your neighbor then be responsible?? Just because they say it, doesn't mean they can enforce it.

[youbet]

Originally Posted by JustCurious

I don't see how that can be enforceable. What if AMEX said that your neighbor would be responsible if you don't pay, would your neighbor then be responsible?? Just because they say it, doesn't mean they can enforce it.

Well....... If the neighbor was an authorized user of the card, used the card and the NEIGHBOR's SIGNATURE was on the receipt........ Maybe the neighbor could be forced to pay?

As you've pointed out JustCurious, this doesn't all follow common sense so it's tough for us lay people to understand. Thanks for your patience and for the helpful examples.

[JustCurious]

Originally Posted by youbet

Well....... If the neighbor was an authorized user of the card, used the card and the NEIGHBOR's SIGNATURE was on the receipt........ Maybe the neighbor could be forced to pay?

Perhaps, but the basis of holding the neighbor responsible would have nothing to do with the cardholder agreement between you (the cardholder) and AMEX.

[Martha]

JustCurious, isn't it also the case that a personal representative in a probate only has to pay a creditor if the creditor files a claim in the probate? (Unless of course the will requires payment of all debts).

[WM]

Originally Posted by youbet

I wonder, is the debt all due to FIL. Or did MIL use her card for this account and sign for some of it?

The AmEx account? Both had cards and both used them. So she did sign for some of the purchases.

Originally Posted by JustCurious

I don't see how that can be enforceable. What if AMEX said that your neighbor would be responsible if you don't pay, would your neighbor then be responsible?? Just because they say it, doesn't mean they can enforce it.

Well, I'd be all in favor of unenforceable The point is that if FIL didn't pay his bills, they can go after MIL for her charges. She still doesn't owe for his. Despite billing statements that are organized by his charges vs. hers, AmEx told us they can't possibly differentiate how much of the revolving charges (and attendant fees, etc.) are hers. We haven't decided yet what to do with them or how much to argue, but I suspect we will just pay her new charges and the revolving debt (about 4K) because I think she used the card much more often than he did, so much of it is probably "hers" anyway.

[JustCurious]

Originally Posted by WM

Well, I'd be all in favor of unenforceable The point is that if FIL didn't pay his bills, they can go after MIL for her charges. She still doesn't owe for his. Despite billing statements that are organized by his charges vs. hers, AmEx told us they can't possibly differentiate how much of the revolving charges (and attendant fees, etc.) are hers. We haven't decided yet what to do with them or how much to argue, but I suspect we will just pay her new charges and the revolving debt (about 4K) because I think she used the card much more often than he did, so much of it is probably "hers" anyway.

I agree. I would send them a check for the total of her charges only. As far as his charges, I would tell them you are not responsible, and if they want to recover that money, they can sue him. I also recommend that you not waste your breath dealing with them on the phone because you won't get anywhere, and there is no record of what was said, so they will later say something was said when it wasn't. Do everything in writing (email, faxes, letters). Trust me on this--do not speak to these people on the phone, life is too short to argue about what was said.

[youbet]

This is an interesting discussion. I wonder what MIL will do for a credit card going forward? I assume the card(s) in FIL's name are, or will be, cancelled since he is deceased and is leaving an unpaid balance as his legacy. Is MIL positioned to qualify for her own card?

I ask because I'd like to be sure DW is OK after I forget to look both ways and step into the street in front of a bus one of these days. She has her own card in her name with me as an authorized user and I have assumed this will be all she needs.

Comments from anyone?