This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Handling Credit Card Debt After the Death of a Spouse

NEW YORK ( LowCards.com) -- When a spouse dies, the surviving mate may be burdened with more than just grief and loneliness. Credit card debt may also haunt the partner that is left behind.

The responsibility for the credit card debt of a deceased spouse will depend on the type of account it was and, in some cases, where you live.

When the Estate Pays

If a credit card was just in your deceased spouse's name, the debt only belongs to your spouse (there are exceptions to this in community property states). The estate, not family members, is responsible for paying off the balance. The executor of the estate will use the assets to pay off the debt. If the estate doesn't have the money to pay the card's balance, then the credit card company must write off the balance and the account is closed. A card company can't legally force someone else to pay.

Neither an authorized user on the account nor a second cardholder who has charging privileges is responsible for the remaining debt when it is not a joint credit card account.

When the Survivors Pay

If the card is a joint account, then the surviving spouse is liable for the balance on that card, along with or instead of the estate.

You could also be responsible for the debt if you live in a community property state. Assets that are gained together during marriage are classified as joint property in these states. This can also apply to debt. Debt gained together during marriage is considered joint debt and the surviving spouse is responsible. Rules vary by state. States that have a community property law include: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Sometimes the surviving spouse will only have to pay the debts that he or she benefited from, such as food, utilities and health care.

After the Funeral

After your spouse dies, you or the executor of the estate must notify all creditors that the account holder has died, even if an account was only in your spouse's name. Find out where to send a copy of the death certificate and include a note with the account number. Send it by certified mail so you have proof that it was sent. Keep a copy of the letter for your records. According to the Credit Card Act of 2009, no new late fees or annual fees can be added to the bill while the estate is being settled. Furthermore, once the credit card company has provided the final balance, the estate will have a 30 day window where the balance can be paid in full and additional interest charges can be avoided.

Expect creditors or collection agencies to call. If there is money in the estate, they may go after it and pressure you for payment. Refer these calls to the executor of the estate if there is one. If not, don't answer any questions until you know what assets you have, what you are responsible for, and what bills must be paid. If collection agencies or credit card companies start calling, make sure the debt is valid, that you are responsible for it, and the debt is not past the statute of limitations (three to six years, varies by state and situation). If they continue to pursue collection on debt that you are not responsible for, file a complaint with the Better Business Bureau and the Consumer Financial Protection Bureau. In addition, you may need to hire a lawyer to fight the actions of a credit card company or collections agency.

If you must assume payments for the debt, begin paying immediately so you aren't hit with late fees and lose points on your credit score. If you don't have the money to pay, contact the credit card company to work out a payment plan. They may accept a portion of the payment to close the account. This is another issue where it may be helpful to have an attorney working for you. Seek legal advice from someone who specializes in estates, wills, and trusts.

Identity protection and the monitoring of credit reports is still important, even after death. Send a letter to the three major credit bureaus -- Equifax, Experian and TransUnion -- to alert them of your spouse's death. Request that the statement, "Do not issue credit", be added to your spouse's credit report. Ask to be notified if there are any attempts to open new accounts in your spouse's name.

More on credit cards:

Bank consumers can be hurt by increasing transaction speed

Prepaid card popularity merits caution

10 financial tips for newlyweds

--By Bill Hardekopf

Bill Hardekopf is chief executive of LowCards.com, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."

Follow LowCards on Twitter

Follow TheStreet on Twitter and become a fan on Facebook.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs