In most cases, no. When you die, any credit card debt you owe is generally paid out of assets from your estate.
Contact the Credit Card Issuer
Inform the manager that the cardholder is deceased. State that you are the executor or administrator of the deceased's estate and that you want to negotiate a settlement of the account.
However, once the three nationwide credit bureaus — Equifax, Experian and TransUnion — are notified someone has died, their credit reports are sealed and a death notice is placed on them. That notification can happen one of two ways — from the executor of the person's estate or from the Social Security Administration.
The bank or the financial institution in question has to file a civil suit for recovery and then the legal representative of the card holder has to make good the payment from the property of the deceased person. You cannot have the estate of a person and not honor the debt obligations.
As discussed in the previous section, after the primary cardholder dies, the surviving spouse or estate executor should notify relevant credit card companies and close the accounts. Joint credit card accounts can continue to be used without any issues.
Typically, a creditor will agree to accept 40% to 50% of the debt you owe, although it could be as much as 80%, depending on whether you're dealing with a debt collector or the original creditor. In either case, your first lump-sum offer should be well below the 40% to 50% range to provide some room for negotiation.
The executor is required to make an inventory of the deceased assets (the car) and debts (the car loan, the credit card balance, mortgage, etc). Any assets must first be used to pay creditors for outstanding debt, with the order determined by state law.
Generally, the deceased person's estate is responsible for paying any unpaid debts. When a person dies, their assets pass to their estate. If there is no money or property left, then the debt generally will not be paid. Generally, no one else is required to pay the debts of someone who died.
A checking or savings account (referred to as a deceased account after the owner's death) is handled according to the deceased's will. If no will was made, the deceased's account will have to go through probate.
Inform the creditor that the deceased passed away; reference the prior call you made. Ask the creditor to place a formal death notice on the deceased credit file and to close the account. Provide information about the decedent, such as his full name, address, Social Security number, birth date and account number.
Family members, including spouses, are generally not responsible for paying off the debts of their deceased relatives. That includes credit card debts, student loans, car loans, mortgages and business loans. Instead, any outstanding debts would be paid out from the deceased person's estate.
After collecting in the deceased's assets, the executors should take steps to settle all outstanding debts. They must pay creditors in full before distributing the estate to the beneficiaries. An executor can be held personally liable for the debts of the estate up to the value of the estate.
By the Social Security Administration (SSA): The SSA periodically sends a list of the newly deceased to the three major consumer credit reporting agencies: Experian, TransUnion and Equifax.
It works like so: You sign up with a debt settlement company. They negotiate with your creditors to allow you to pay a lump sum that is less than the full amount that you owe. You then pay the program a specific amount each month. Clearly there is one positive about a debt relief program.
There are 3 ways to remove collections without paying: 1) Write and mail a Goodwill letter asking for forgiveness, 2) study the FCRA and FDCPA and craft dispute letters to challenge the collection, and 3) Have a collections removal expert delete it for you.
Once a Grant of Probate has been awarded, the executor or administrator will be able to take this document to any banks where the person who has died held an account. They will then be given permission to withdraw any money from the accounts and distribute it as per instructions in the Will.
The person whose name is on the credit account is fully responsible for all charges made to the card. In other words: if you make someone an authorized user on your credit card and they run up a huge debt, you're the one who's ultimately responsible for paying off your credit card debt.
The relevant information to focus on here is that California is a community property state, which means that legally married couples jointly own everything – including debt. As a result, it is possible for a creditor to garnish a spouse's bank account if their spouse owes a debt.
In the case of a joint account, the surviving person is considered the owner of the account. However, it is important to have the name of the deceased person removed so that if anything should happen that requires an intervention by the FDIC, the information on the account will be up to date.
The life insurance death benefit is not intended to be part of your estate because it is payable on death — it goes directly to the beneficiaries named in your policy when you die, avoiding the probate process. However, life insurance proceeds are considered part of an estate for tax purposes.
You'll need to contact each of the three credit bureaus to request a credit freeze. You can call to request the freeze, then follow up by mail to request the credit report be flagged “Deceased. Do not issue credit.”
Place your name, address and phone number at the top of the letter, followed by the date, then the name, address and phone number of the individual or agency handling your deceased relative's estate.