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

[WM]

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]

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]

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]

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.

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]

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]

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]

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]

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]

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.

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]

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?

 

[SecondCor521]

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?

Your DW should probably have more than one card. Scenario: You die, she attempts to buy you a casket, but her card gets rejected due to fraud concerns because she usually doesn't buy caskets. Your body is left on a slab somewhere until she can get it straightened out. Emotional anguish? I dunno.

Anyway, both husbands and wives should have established credit histories in their own name. This is mentioned with some regularity in the financial planning press.

One can, if one wishes, request that the primary cardholder be switched from FIL to MIL. May be difficult with FIL deceased, because I think the forms require both signatures. They may pull a credit report on MIL to see if her income supports the credit line. I went through that process with a few of our credit cards in my divorce last year.

2Cor521

PS -- youbet, sorry if I sounded blunt in my first paragraph above. I've had to deal with death, sickness, and divorce in my own life and will have some upcoming deaths to deal with and that is how I react.

 

[JustCurious]

youbet, the answer is obvious: after you are gone, your wife will have to qualify for credit on her own since you will be cavorting with the angels (or the devil as the case may be). If she has a credit card in her name only, then she would just keep using that card.

I would even suggest that she get a card in her name only, without you as an authorized user. That way, there would be no confusion at all that it is her card, and her card only. This is what my DW and I do, we each have our own cards in our own individual names, and neither of us is an authorized user on the other's cards. It avoids confusion. And my wife is under instruction to tell my credit card company to pound sand in the event that I die since there will be no probate assets, and she is not obligated on the account.

 

[youbet]

youbet, the answer is obvious

Easy for you to say!

I would even suggest that she get a card in her name only, without you as an authorized user. That way, there would be no confusion at all that it is her card, and her card only.

Here's the deal on her card. Years ago we read that she should have her own credit, so she applied for a card. On the application, it asked if she wanted a second card to be issued to another person and she filled in my name. None of my job, financial or credit history was given and I signed nothing except the back of my card when it arrived. She's had that for many years and I don't think I have ever used the card they sent with my name on it.

Gosh, I hate to open up this can of worms. We use our cards all the time and have had them a long time.......one since 1970. Frankly, we just haven't thought much about the details other than making sure the credit limits were high enough to easily cover international travel. Then we just use 'em and pay the bill in full every month. It gets to be kind of a routine.

But if she needs to get another card, this time she can fill out the application and not request a card for me. I sure don't need it. In fact, we don't need anymore cards. I just wouldn't want her to have any issues if I get hit by the bus first.

Thanks for your comments.

 

[youbet]

PS -- youbet, sorry if I sounded blunt in my first paragraph above. I've had to deal with death, sickness, and divorce in my own life and will have some upcoming deaths to deal with and that is how I react.

No, no, not too blunt. I know what ya mean.

While not really interested in managing our finances, DW does know how to drive a Bobcat, back a trailer and write checks on our main brokerage account! So, one way or the other, she'd get me in the ground if she had to do it herself or write a check to the undertaker!

Perhaps one way to solve this would be for her to write her credit card company and ask if my death would affect her credit card in any way. As long as they say no, she should be good to go as she has a pretty high credit limit on it. If they say yes, she could find out why and take the appropriate action to remedy.

Thanks for the comments and discussion. We've never been through any of this, so it is indeed helpful to learn from others.

 

[WM]

FWIW, my MIL has other debt on her credit record, since the house mortgage was in her name (now paid off) and they lease a car, also in her name (paid in full every month). So it's not as though she'll be starting with nothing. And right now, her credit report reflects my FIL's accounts and they are all in good standing because he always paid something every month, even if not the minimums. So we will be applying for a card for her very soon. The worst they could do is cancel it on her, but I suspect instead they will just jack up the interest rate if her credit tanks. Which won't be much of an issue, since the last thing she will do after all this is carry any balance!

Also, imagine the nightmare had my MIL actually been the one to go first - all the debt is still there AND all the assets would then have been my FIL's, subject to creditors. Definitely good to plan for either scenario.

This whole thing has definitely made DH and I more aware of how we have our finances structured, and made him realize that he is not as up on our finances as he thought. He is looking for a little more tutoring!

 

[blahdeblah]

Alright so a month and a half ago my grandmother died. since then one of the companies has been calling unrelentlessly telling me I need to pay. That they'll do $5 for every $7 owed and blah blah blah. I know I'm not required to pay. but its a pain receiving these calls.... How can I get them to stop?

 

[OAG]

Alright so a month and a half ago my grandmother died. since then one of the companies has been calling unrelentlessly telling me I need to pay. That they'll do $5 for every $7 owed and blah blah blah. I know I'm not required to pay. but its a pain receiving these calls.... How can I get them to stop?

1. Change your phone number. 2. Hire an Attorney to send a nice "Attorney Letter" Only. 4. Move. 5. Pay them (not recommended).

 

[JohnDoe]

Alright so a month and a half ago my grandmother died. since then one of the companies has been calling unrelentlessly telling me I need to pay. That they'll do $5 for every $7 owed and blah blah blah. I know I'm not required to pay. but its a pain receiving these calls.... How can I get them to stop?

Scroll down to the Q & A...there might be some answers for you.

Fast Answers: Savings & Spending, Credit, Collection. - MSN Money

 

[M Paquette]

Alright so a month and a half ago my grandmother died. since then one of the companies has been calling unrelentlessly telling me I need to pay. That they'll do $5 for every $7 owed and blah blah blah. I know I'm not required to pay. but its a pain receiving these calls.... How can I get them to stop?

Oh, boy. I'm going through this drill right now for my mother's estate.

First, the executor of the estate should send each creditor that can be identified a letter identifying the account, date of death, and include a photocopy of the death certificate and the credit card cut in half. Send the letters by certified mail with return receipt, to the address for communications for each card. Keep copies of the letters. (A few cards will insist on a certified copy of a death certificate, but those are expensive. If they need it they'll ask for it.)

Ideally this should be done as soon as possible, but that can be pretty hard to deal with.

Now, if the account of the deceased is sold to a collection agency, and they are harassing you, then you need to deal with them. These folks will track down any relatives and hit them up for the money. Ask for the name, address, and phone number of the agency the next time they call. Send a certified letter with return receipt telling them that you don't owe the debt, and the collector should not contact you again.

Debt Collection FAQs: A Guide for Consumers

If they do call, contact your state attorney general and the Federal Trade Commission. Use annualcreditreport.com to check each of the three agencies that do credit reporting (I do one every 4 months around the year), and look out for bogus entries. Follow the credit agency instructions for filing a claim dispute.

 

[Westernskies]

This thread has it all!
mortality, spirituality, morality, legality, reality, and frugality!

 

[FinanceDude]

The credit card companies don't contact the family members and say "You are not legally obligated to pay, but we think you are ethically obligated to pay..."

yes, they do..........

 

[Niko]

You're right. Just because they say it doesn't make it an enforceable agreement. However, I could easily see a court holding an authorized used responsible for their charges, under those circumstances. Their use of the card (and availing themselves of the benefits offered by the CC company) indicates an agreement to repay. You don't need a signature to have a valid contract.

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.