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When it comes to managing financial matters, one of the components that most people have to deal with is the issue of credit card debt. It is not unusual for an individual to leave behind some amount of debt at the time of death. Survivors may be concerned as to what amount of liability is present with this form of debt. Because there are varying practices allowed by law around the world, it is not possible to definitively state that in all cases credit card debt is not included in the inherited debt passed on to the survivors of the deceased. The good news is that in most cases, the inherited debt that may be tied to the estate of the deceased does not include credit card debt. The estate may be responsible for the debt up to the value of the estate, but usually no more than that.
Perhaps the most clear cut scenario in which credit card debt is not transferred to a survivor is when there are no other persons listed as debtors on the credit card account. With this type of situation, there literally is not anyone who is legally responsible for assuming the debt. Many credit card issuers have provisions written into their agreements to collect on insurance that is part of the basic contract, in the event that the cardholder dies.
Even in the extraordinary situation where no such insurance rider is present, the credit card issuer may choose to not make any attempt to collect the balance due. For example, if the balance is a relatively small one, the credit card issuer may consider the balance to not be worth the trouble to try to locate any documentation that will allow them to attempt to collect from another individual, even a living relative of the deceased.
Another example is when the only surviving relative is not of legal age to be responsible for the credit card debt left behind by the deceased. For example, minor children who have lost a parent will not be considered liable for outstanding credit card balances. However, depending on local law, an estate with liquid assets may be expected to settle the credit card debt. If there are no assets that may be used for this purpose, then the credit card company has little to no options for recourse, other than to write off the debt.
Bankruptcy can create another aspect of the situation, but even in these types of scenarios, there is still an excellent chance that no survivor will be responsible for paying off credit card debit. In a situation where the credit card debt is listed on a bankruptcy that is intended to discharge all debt, there really is not anything for the survivors to address. With bankruptcies where the purpose was to allow the individual to reorganize outstanding debt and eventually pay it off under the protection of the courts, there may be some degree of liability. However, most courts of jurisdiction within the United States would not require a survivor or executor to continue paying regular installments to the courts in the event of the death of the debtor. Providing a death certificate is usually sufficient to discharge any remaining obligation.
Credit card debt and the obligations to repay the balances incurred on the charge accounts are subject to laws that govern financial obligations within the country of residence. In most cases, there will be no obligation at all. This is not always the case, however. Before making assumptions about whether the survivor or survivors is obligated to repay the debts, it is always a good idea to check with a financial professional who is proficient in applicable laws.
SurfNTurf- Sorry to hear about your mom, I guess in a sense the credit card debt was sort of inherited. But usually the writer is correct. Family members are not responsible for a deceased family member’s credit balance unless they are listed on the account.
A death certificate is required for a company to retire the debt of a deceased person, providing that the estate has no assets. My best friend just went through something like this which is why I know.
Great article- I just want to add that my mother had placed my sister as a secondary card holder on her account in order to establish my sister’s credit when she was a teenager. About ten years ago my mother died and my sister was now responsible for the debt.
My sister forgot that my mom had added her to the account. If my sister not had been placed on the account, then the balance would have been forgiven. It was a small balance, but had it been a large balance it would have been quite the surprise.
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