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Does Your Debt Die With You?

One of the most frequently asked questions when a loved one dies is “does my loved one’s debt live on or die with them?”  While mourning the loss of a loved can be difficult, the added stress of dealing with their debt can exacerbate these feelings of loss. Are you responsible for what your loved one left behind?  Does your loved one’s debt live on or is it buried with them? The simple answer……it depends.

When it comes to dealing with credit card debt of your loved one, an overwhelming majority of the time you won’t have to worry about being responsible for repayment.  As a rule of thumb, creditors have to “get in line” to receive payment from the deceased’s estate.  When one dies, all that they own are considered part of the deceased’s “estate” that creditors may make claims upon in probate court. If the deceased died with nothing, or the estate did not have amply assets or money to cover creditors, then the debt dies too.  The creditors cannot turn to family members to take over personal responsibility for their deceased loved ones bills.  

One situation in which a surviving spouse may be responsible for a the debt of the deceased is when the surviving spouse  is a co-signer on the account – that is, they were an equal card or account holder that signed up for the account.  If that is the case, even if the surviving spouse did not accrue any of the balance, they may be responsible for repayment.  

Another situation arises in states that are considered “community property” states.  A community property state presumes that all marital property (items or property obtained by a spouse during the marriage within the community property state) is owned 50-50 between spouses.  And as such, the debts are owned 50-50 too.  When one spouse dies, the other is the sole owner.  As such the debt can pass on to the surviving spouse.  There are 9 community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin – with Alaska being an “option” state) and one can defeat the presumption of owning the property by making a showing that the property was separate from the marriage.  We can write another blog on that topic alone!

Often times, debt collectors who get their hands on a deceased’s credit card debt, begin contacting loved ones for repayment. While the Fair Debt Collection Practices Act (“FDCPA”) was enacted to protect consumers from scrupulous collection practices, one must be aware of the law and their rights before making payment on behalf of a deceased loved one.  If the credit card belonged to the deceased, and only the deceased, then the deceased’s estate is responsible for repayment.  If there is not enough money left in the estate to pay off the balance, then that creditor is left empty-handed.  If the surviving spouse were a co-signer on the account, they may be responsible for repayment.  However, if the surviving spouse was simply an authorized user on the account, then they have no responsibility, even if the charges were accrued by that person.          

If you believe your rights may have been violated by a debt collector or you are in need of additional information regarding the debt of a deceased loved one, contact SmithMarco P.C. for a completely free case review.

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