No one likes to think about end-of-life issues. You can’t make a specific plan or have difficult conversations with your loved ones about this topic. However, it can be as uncomfortable as the subject is, and prepares what happens to your assets and your liabilities after your death.
Often these conversations focus on “who gets what” and traditional “will reading” plans. However, your debt, including your credit card liabilities, is just as much a part of what you have left as your assets.
In particular, what happens to your credit card liability after a cardholder dies depends on many factors, including how you set up your account and the status of your property.
When someone dies, who will take charge of the debt?
The issuer still wants to retrieve the money even after the cardholder’s death, so credit card debt will not go away when someone dies.
There are several possibilities for who will manage the debt after the death of a cardholder.
- Cosigner or a joint account holder. If a credit card is shared with a joint account holder or co-signer, any lingering liability is liable.
- real estate. If the sole cardholder leaves a liability on the card at the time of death, the real estate is responsible for repaying that account from the remaining assets.
- The spouse of the deceased. Whether a person is liable for a spouse’s credit card debt after death depends on several factors. For example, in the state of the community’s property, any debts acquired during marriage are the responsibility of the community, even if only one spouse is listed in the account. There are other state laws that may require a spouse to assume responsibility.
How real estate and beneficiaries are affected
You cannot personally be held responsible for the deceased’s debts, but if you are a beneficiary of that person’s property, you will still feel the impact of it. This is because the unpaid debt upon death of a person will be paid from the property’s assets before the designated beneficiary receives the distribution. In other words, any liabilities left after a loved one die can be eaten immediately on the remaining assets, and the beneficiaries can receive what is left (if any).
Please note that there is a period of time when the creditor will file a claim against the property after someone’s death. Real Estate Inspection – the process in which assets such as cash, investments, real estate and other assets are sold or split between heirs – prioritize creditors. Unlike secured liabilities such as mortgages protected by property or vehicles protected by vehicles, credit card liabilities are not protected. Therefore, when it comes to paying off debts from real estate, credit card companies may be behind the line.
If the property does not have enough money to pay all the debts, the deceased’s credit card liability may be unpaid. In this case, the surviving family will not be liable for the obligation unless it is a joint account holder or co-signer or is liable under state law.
Six steps to take after a credit card holder dies
Notify financial institutions when a loved one dies and push them aside (or even forget) to close their credit card account. However, if these important tasks have been ignored for too long, many problems can arise.
For example, identity thieves occasionally troll deaths and online records of trolls looking for recently deceased people who are impersonating them when creating new accounts. Hackers can also look for ways to steal from the deceased’s existing account. This may not be noticed if you have not notified the bank or card issuer to the deceased.
Here are six steps that a family member or heir should take to prevent financial problems when a family dies.
1. Organize all financial documents
If you are the executor of a real estate, you must start by sorting out that person’s financial account. Court accredited representatives and surviving spouses may also request a copy of the deceased’s credit report listing all accounts in that person’s name.
“Sometimes people can’t even get on their credit cards and not know that,” says Pennsylvania lawyer Linda Kerns. “Maybe when they filled out their credit card application, the (co-card holder) wouldn’t even tell them.”
These accounts may appear several years later at the time of death or divorce.
“I tell people to check their credit card reports regularly,” advises Kerns. “Solve it before death, divorce, or traumatic events.”
2. Ask multiple copies of the death certificate
You may need some official copies of your death certificate to send it to your credit card company, resolve life insurance claims, and assist with other real estate activities. A funeral director who handles additional services for your loved one can help you get a copy of your death certificate. You may also be able to request a copy from your state’s Department of Health or from your important records.
3. Prevents credit card usage
After the cardholder dies, credit cards are no longer valid. If you are an authorized user of your account, you will not be able to use your card for legal purchases by the deceased, such as funerals and final costs.
Continuing using your credit card as a certified user after the death of a cardholder can probably lead to credit card fraud without you knowing it and get you into big trouble. Real estate attorneys recommend collecting all credit cards from people including authorized user cards and placing them in a safe place or destroying them.
4. Notify your credit card company of your death
Once you have collected that person’s financial account, you can contact each card issuer and request that you cancel your account. For joint credit cards, we recommend notifying the issuer that the joint cardholder has died. In both cases, you need to act promptly to avoid interest and funding fees.
We also check if each credit card account has an automatic or recurring fee, such as phone or utility bills, and immediately cancel or transfer to another card.
Start by calling the number on the back of the card to let you know the situation. Representatives can provide an address where they need to flag their accounts, send official notifications and send support documents containing official death certificates. Send the document via certified mail and save the receipt.
5. Request a credit freeze from all three credit departments
We recommend contacting all three credit reporting agencies, Experian, Equifax and Transunion, to request a credit freeze from the deceased. Freezes can prevent anyone from opening a new credit card or other account using their name and Social Security number.
Start by calling the reporting agency with the deceased’s name, Social Security number, date of birth and date of death. Follow up by mail and request that your credit report immediately flag you as soon as you see it “Deceased. Please do not issue credit.”
| Credit Bureau | telephone number | Mailing address |
|---|---|---|
| Equifax | 888-378-4329 | Equifax Information Services LLC PO Box 105788 Atlanta, GA 30348-5788 |
| Experian | 888-397-3742 | Experian Customer Support PO Box 4500 Allen, TX 75013-4500 |
| Trans Union | 800-916-8800 | Transunion PO Box 160 Woodlyn, PA 19094 |
6. Know your rights before paying the debt collector
Depending on state law, you may need to wait a specified amount of time before your bill is in place, and you must post a public death notice in the newspaper before you can distribute the money.
When dealing with debt collectors, it is essential to know your rights. Remember, you are protected by the Federal Fair Debt Collection Practices Act (FDCPA). This makes it illegal for debt collectors to use abusive, unfair, or deceptive practices when collecting debts. Don’t convince individual creditors that they can jump side by side and get payments from the property first – especially if they may not have enough money to turn.
Some debt collectors can become aggressive and they may try to prey on the feelings of the survivors. When you reach a transaction with a debt collector, please do not call and agree to payment plans or other agreements.
If the card issuer reaches out to you in a payment request, ask your credit card company to submit proof of your claim to the property. You may include this request to your credit card company in your written notice or send it later.
What happens to credit card rewards when the cardholder dies?
What happens to the cardholder’s accumulated credit card rewards (points, miles, cash rewards, etc.) after the cardholder dies depends on the card issuer’s policy. If the card is a joint card account, the surviving cardholder may retain access to accumulated rewards.
Some issuers, such as American Express, allow the deceased property to be transferred for the benefit of the appointed heir (usually within the designated time frame after the cardholder’s death). Other issuers lose the remaining rewards and leave no profits to the heirs, while other issuers automatically convert unused rewards into statement credits.
Credit card issuers usually take into account miles or points that belong to the rewards program itself, not the cardholder. The first step is to contact your rewards program, bank, or card issuer to see if your heirs can use the points or miles available on your credit card account.
Cardholders can provide heir information about all compensation accounts in Will or other estate planning documents, providing optimal control over cardholder’s post-death rewards.
Conclusion
There are many tasks to manage when someone dies, especially when it comes to financial issues such as assets and unpaid liabilities.
Unfortunately, credit card debt is not beautiful when the cardholder dies. That debt is still paid to the card issuer and, if sufficient funds exist, must usually be paid by the remaining signatories or real estate in the account. If you are a beneficiary or executor of the property, it is important to take appropriate measures to handle remaining credit card liabilities, such as cancel accounts, notifications to the issuer and the credit department, and maintaining financial documents.
