Can family be held responsible for credit card debt if I die?

[Ladyhawk]

I don't have a husband or children. My closest family members are a mother and brother.

My health isn't that great and any credit card debt I'm likely to accrue is due to that very fact, so please don't tell me to live within my means or pay down the credit card debt. (The bold print is for those of you who don't read entire posts. You know who you are.)

Suppose I drop dead of a heart attack. Can my family be held responsible for my credit card debt, and if so, why? Considering I don't have a nuclear family of my own, I don't see how this could be legal.

I ran across an article that claims family is, indeed, responsible (to one degree or other) for any debts accrued: http://www.associatedcontent.com/article/25778/what_happens_to_your_debt_when_you.html?cat=3

The author doesn't explain which family members may be responsible for debt. Spouse and children? Mothers and fathers? Brothers and sisters? Third cousins eighty times removed? My father's brother's nephew's cousin's former roommate?

[truebrit71]

1. No.

It is my understanding that the only way they can be held responsible is if they are co-owners on any of the cards.

[vadawg]

2. i always believed unsecured debt is your debt, not your family's

if you have an estate that would be liable but otherwise i dont think anyone needs to pay it..

[SoCalNative]

3. If their name isn't on the account

then they cannot be held responsible. Your ESTATE would be responsible and as such any debts would be paid out of the ESTATE prior to any beneficiaries being paid any inheritance.

[Captain Hilts]

4. No, but your estate is. If you can afford to pay, you generally have to. Credit card folks

when you call them will tell you otherwise. And if your estate waits until they have access to your money to pay them, they might get hassled with phone calls, etc. I just went through this with my mother's finances.

The WORST to deal with - by FAR - was QVC. She died oweing them $600. Mom wasn't even cold when they sold her 'debt' to a collector that hassled me with repeated calls, etc. That's how QVC treats its 'family'.

[the other one]

5. NO, but they will sure as hell try to get it from them anyway

But they have no legal right to it.

Credit Cards are UNSECURED loans. They can only take what you bought with the credit card, if its worth taking at all. Good luck getting the oil out of the tank.

[Captain Hilts]

6. Exactly right. Your estate has to pay, but no one else. nt

[gateley]

7. You have to live within your means - and pay down your credit cards.

I. Couldn't. Stop. Myself. :7

I hope you get some actual helpful answers rather than smart ass ones like this. :hi:

And by the way, I say rack up the bills to stay as healthy as you can! :hug:

[NYC_SKP]

49. Oh, You are BAD!!!

:spank:

When I read the subject line and author I thought, "that doesn't sound like gateley!"

[ellenfl]

8. no . . . and don't let the cc companies try to get money

out of them. the cc companies WILL try but your family only has liability if they co-signed on the card. if it is in your name only, your family has no obligation to pay your debts. a spouse would be a different matter.

ellen fl

[liberalhistorian]

31. A spouse is not automatically liable for a deceased's spouse's

debt. The only times they're actually responsible is if they're a cosigner or a joint account holder OR if they live in a community property state. There are only six community property states in the country. California and Idaho are two of them, can't remember what the others are at the moment.

[quiller4]

43. Washington is a community property state . n/t

[lapfog_1]

9. It depends.

http://www.creditcards.com/credit-card-news/credit-card-debt-death-1282.php

It would seem unlikely that any heirs (mother, brother, etc) would be on the hook, but this article is better at explaining thing than I am.

[Fresh_Start]

10. depends

1) will you have any type of estate? If so, the debt will be deducted from the estate
2) are they joint owners or co-signers on your debt? If so, they will be fully liable
3) do they have access to your credit? If so (and if they use it) they may be responsible for charges they incur especially after your demise
4) in community property states the spouse may be responsible
5) is it secured credit, if so the security will go to the creditor and not to your survivors

[Warpy]

11. A lien will be placed against your estate

so if you want your mother or brother to have anything at all of yours, give it to them before you die. You do know the time and day, right?

[wolfgangmo]

19. Best idea on here.

Just make sure that they know what you gave them and have a contract so they can't show up before you die and pick up the car.

I would set it up like this. Sell the item to them now for a small consideration. Lease it back from them for the same small consideration with a contract that says that the lease expires when you do.

Voila, they have ownership but you have use and it costs you and them nothing.

[Statistical]

26. If it is anything of substantial value be sure to use a lawyer.

The bloodsuckers will attempt to reclaim the property as part of the estate and then have estate pay the debt holders if they can.

You want to make sure a lawyer has it air tight.

If it is something like a $2000 car I would risk it but if it is something like a $250,000 house free & clear use a lawywer.

[RB TexLa]

47. Most states has to be a year before you die. Or it will be part of the estate.

[robinlynne]

12. no. not that debt or any other debt. My father died leaving bills, and we were not liable for any

of them. of course he did not leave an estate. Had he, it is possible that the creditors might have been paid from the estate. he did not own a home, or anything else, except a car, which the bank took.

[GreenStormCloud]

13. In the U.S., No they can't be held responsible.

However, if you leave an estate, then the estate can be responsible. IOW, the debts must be paid and the remainder goes to your heirs.

If there is no remainder, but only further debt, then the credit card companies have to take the hit. Your family is safe.

If you have life insurance, the companies can't touch any of that money, unless you have made your estate as beneficiary. If a family member is beneficiary, that person gets all the money in the policy, credit card companies are out of luck.

[Bunny]

14. The answer you seek is in your own article:

Right about now you may be wondering how it is fair that your surviving family must pay off your debt. The truth is that in most cases they are not actually handing over their hard earned money to pay your remaining debt. The way that most creditors obtain money that is legally owed to them is by going after any estate money or property. This will not directly take money from your family; however, it may prevent them from obtaining their full inheritance.

A number of states have begun placing limitations on the amount of estate money or property a creditor can claim; however, even with limitations in place most creditors will still try get what is owed to them. The only way that debt can be forgotten after death is if there is no money, property, or other assets left behind. If money cannot be collected from an estate then creditors will likely not go after surviving family members except for in rare cases.

One of the above mentioned rare cases includes joint property or joint debt. Many married couples have joint bank accounts and joint debt. This makes it possible for a surviving spouse to be held legally responsible for the occurred debt of their loved one even if they may not have generated the debt themselves. Depending on the amount of debt, this is something that could cause problems for surviving spouses who are financially unable to afford everyday necessities and pay off old debt."

In other words, unless you are directly tied to the debt, you can't be made to pay it. But they can go after the estate of the deceased, and if they get some of the assets, your inheritance is reduced. Thus, you 'paid' the debt, just not out of your own pocket.

[nykym]

15. From what I have been told

No! Your estate is liable for any debts, but check and see if there is a time limit. In NY to my understanding the entity holding your note has 7 months after your death to make a claim for payment. After that you can just direct them to the deceased plot number and wish them luck!

[Crabby Appleton]

16. Family no, estate yes

Your family is not responsible for the debt, however if you have some cash or other assets then thoses would be use to pay debts first and the remainder (if any) would go to your heirs/family, just as stated in the linked article.

[JVS]

17. The only things they can take would be things of value left behind by you.

And by things of value, I mean things like real estate, bank accounts, stocks, and automobile (unless they're old low value cars, in which case they don't want the trouble). Basically anything that needs to be signed over officially is something they can take a crack at. Stuff like paintings, jewelry, family heirlooms, etc. can't be taken unless they are of truly massive value.

[forum slut]

18. You need to speak with a lawyer about estate planning. You can definitely screw the CC companies tho

What you need to understand is that executors will have to be appointed to finalize your estate's business. In this finalization, a schedule is outlined regarding who gets paid first. Credit card companies are the last to get paid off on this schedule so, if after having paid off everyone else, there is no money to pay the credit cards, the estate can file for insolvency which means your lawyer sends a nice little letter to the credit card companies informing them that the estate has no money to give them. Definitely talk to a lawyer and make sure he or she is on board with this before you pass. Your lawyer can set this up so your children and spouse do not have to pay off you credit card debt with their inheritance. It's a somewhat complicated arrangement but worth it to your family.

[southernyankeebelle]

20. I don't know if they can do it. I would check with a lawyer. I don't know if they do it

anymore or not but you could get protection if something happens to you and it is paid off. I know years ago I bought my first car. Brand new the car cost $3,000. That was allot of a teenage kid back then. My dad co-signed for me. Any way my payments were $75.00 a month. Well I paid ahead of time to pay the car off. I was less than $1,000 from the final payment and my dad had died. The credit union paid the rest. I was happy my dad took car of it that way but sorry I paid so far in advance. I would check with the companies. I also have a protection if anyone trys to buy something on line with my credit card number. They call everytime I use my card.

[The Midway Rebel]

21. Anecdotal story here...

24 years ago, I had a friend who died unexpectedly. He was young, un married, no kids and did not have a lot of property. The term "estate" in his case is laughable. He was a young car mecahnic and owned very little. But, alas he did owe. Eventually, they came to the house that he and his friends rented and took his old couch, his broken down old cars and his dog...I shit you not.

[iceman66]

36. I wonder what they did with the dog!

[The Midway Rebel]

39. We always wondered too. Best guess: sold to a lab.

This region of Amurica has always had an element of dog thefts, (especially breeds with large heads) puppy mills, breeding and selling dogs to sell to labs for animal research and such. Then again, maybe they just took the dog to the pound out of meanness to my deceased and in debt friend.

It one of the things has led me to a life of hate and distrust of "credit".

[pnwmom]

22. No, but they may try hounding your family members about this, playing on

their sense of "duty." Warn your relatives to ignore such calls or letters.

Legally, they can only go after your estate -- that is, any assets you have after your death -- or after people who owned accounts jointly with you, such as a husband might, or a child. If you don't own anything with your mother and brother, they can't go after them.

[saracat]

No they are not.But protect what asserts you may have by putting them all in a trust.

Then there is no "estate" .You can pick up trust papers and do it yourself. Make your family or a charity the beneficiary of the trust.

[MajorChode]

23. The answer is YOU will still be held responsible, even after your death

They will go after your estate, not your family, which means your family will have to get in line behind your creditors.

When I die I want all of my bills to be due and my last check to bounce.

[kestrel91316]

24. NO. Your debts die with you. Your estate is liable, but if it has no money,

the debts die.

Anyone can write anything at all on Associated Content. I doubt they have a single fact checker on staff.

[Statistical]

25. No BUT YOUR ESTATE will have to pay if it has means (from say a house or life insurance policy)

So for example....

If you have $50K in debt and $250K life insurance policy then your estate will need to pay the $50K as part of probate. So when you die ALL YOUR ASSETS become part of your estate. Some assets will be sold to cover debt and whatever is left goes to your family.

Worst case scenario is your family gets nothing. They can't be required to pay the debt.

[Bunny]

27. I don't think you're correct regarding life insurance.

Unless your estate is the beneficiary of the insurance policy, your creditors cannot touch it. They will act like they can, and try to intimidate your family into using the insurance to pay debt, but they don't have the right to any of it. It belongs to the beneficiary.

[Statistical]

29. You likely are right about that...

I forgot life insurance pays directly to beneficiary so it never enters the estate.

[Statistical]

28. Forgot to add. Real estate can be complicated.

Say you have a home worth $250K paid in full and $50K in CC debt. Say also you have no other property or debt.

You will the house to a family member. Now before your house leaves probate the debt of $50K will have to be paid.

However you don't have the funds for that. In some states the creditor can demand the house be sold ($50K to creditor, $200K to family) or your family member can pay the $50K to get home free & clear or they can get mortgage on the property to clear the debt.

Depending on the financial means & credit of your family members they may not be able to do all those options and could have to sell the home in probate which may not be what you want.

If you have substantial real-estate without mortgage and at the same time unsecured debt you may wish to talk to a probate lawyer.

[liberalhistorian]

33. No, no, no, they CANNOT take life

insurance proceeds, period, unless the estate is the beneficiary, which is quite rare, for obvious reasons. Life insurance proceeds are generally safe. They can't try to take the proceeds from the beneficiary, either.

[Xithras]

37. Except in a community property state, if the spouse is the beneficiary.

In that case, the portion of the policy paid to the spouse is considered part of the community property, and therefore a pursuable asset. Portions of the policy paid to other family members are not pursuable.

My life insurance policy was written with this in mind. It's large enough to pay off my bills AND give my wife about 10 years of income.

[quiller4]

44. That treatment of life insurance proceeds varies. In Washington

state life insurance proceeds to surviving spouses are not considered part of community property and cannot be seized to pay debts of a deceased spouse.

[Swede]

53. A life insurance payout is not your asset,it is the beneficiary's..

So only that amount named to the estate,can be sought by creditors.

[liberalhistorian]

30. The short answer is a qualified NO.

I say "qualified" because there are certain conditions under which they would be liable, which are: if they cosigned a loan with you, if they're on a joint account with you (any type of credit card, etc.), or if you have a joint loan in both of your names. Or if you're a spouse living in a community property state, where both spouses are considered legally liable for debts, no matter when or by which spouse they were incurred, as well as equal owners of any assets. If none of those apply, then no, family members ARE NOT LIABLE. No matter how much creditors/collectors may try to harass family members of the deceased for the money. Creditors know that they must make a claim with the person's ESTATE, that they cannot legally go after the personal assets of family members if the above conditions don't apply. But they take advantage of the fact that too many people don't know this.

And don't take the word of Associated Content writers as gospel. They are generally not experts at all and are wrong many times.

[Xolodno]

32. Nope....

...but they sure as hell will try. Right before my father passed away we set up a trust and transferred everything to it. Even then, we made sure my parents home was homestead and listed as a primary residence...we even added my name and my siblings to the deed. I just kept sending the collectors copies of the death certificate. Eventually the got the hint and left us alone.

What really throws a monkey wrench into the machine is this, my father was my mom's source of income and she had her name on his cards as well. Can't tell you how many fucking creditors call me looking for my mom. I tell them wrong number and hang up (because there next question is "do you know where she is at"). What sucks, it seems once they find out they aren't going to be able to squeeze a rock to get blood...they sell the debt to another collector. Some are collection agencies and "law firms" combined...and of course they use the law firm title.

Ridiculous, my mom lives off of social security now. Don't know if they can "garnish" that, but should they pull anything, calling a lawyer and filing a chapter for her. If they want to throw a "lien" against her home, so be it, no intentions of selling for a long time.

[liberalhistorian]

35. FYI, they cannot take or garnish her social

security or pensions. SS can only be garnished or taken for tax liens, child support or student loans. Period. All other creditors are out of luck. Now, they can try to attach her bank account; they can do "searches" to find accounts with her name on them and then attach them. She would then have to go to court and show that the only funds in the account were from social security.

[AlienGirl]

34. Just make sure to protect your pets by getting ownership out of your name!

Your animals are considered part of your "estate." That means if you die owing money, your pets will be sold to the highest bidder to pay down your debt!

I have heard that this is true even if you've designated plans for them (such as long-term sanctuary care) in your will.

I suggest finding a trusted younger person and making one of those sale-and-lease contracts mentioned up-thread; then leave explicit instructions to that person about who should be the guardians of your animals after you die.

Tucker

[Ladyhawk]

38. Thanks. You thought of Gabby. :)

I've been thinking of him, too.

My will stipulates that he becomes the property of The Gabriel Foundation, but I should make some kind of up-front deal with them.

How's your evil cockatoo? :)

My evil green bird is doing well.

[AlienGirl]

56. The Velociraptor of Cuteness is doing well, still plottin' to take over the world!

The Gabriel Foundation may not be able to make that kind of deal ("sale" and "lease") with you. You can ask, but I know that rescues often have strict requirements about that kind of thing.

If they can't, find a young adult who can do it and who will agree to place Gabby where you choose.

I'm thinking of setting up a website for that purpose: creating designated "inheritors" and/or "paperwork owners" for parrots. Certainly it would be better than leaving it to chance and probate court!

Tucker

[Generic Brad]

40. They will never let you rest in peace

Bill collectors of the afterlife are among the most relentless. They will even call you during dinner time.

[SoCalDem]

41. What you owe will be deducted from your estate

If you have no property or anything of value to be sold, there is no repayment to them.

IF a child or family member was ever issued a card on that account, they could be hassled, but if you are the only one on the account, they cannot be made to pay

[arthritisR_US]

42. No! Neither your mother or brother can be held responsible. n/t

[quaker bill]

45. Yup, they certainly can

this is what probate is all about. If you are concerned, buy credit life insurance. It pays off the cards if you pass. My dad did this and it worked just fine.

[Swede]

55. By term insurance instead,it is more cost effective.

[Bonobo]

46. Nope, but your "estate" is responsible.

Assuming you are "in the black" enough to have an 'estate'.

[cynatnite]

48. My sister and I weren't held liable for our father's credit card debt when he died. n/t

[forum slut]

50. you need to talk to a lawyer. The credit card companies can fuck your beneficiaries

if you don't set up your estate to prevent it. You need to talk to him/her about declaring the estate insolvent before the credit card companies can get their tentacles entwined into your assets. All of your estate needs to be "eaten up" before it ever gets to them. DO NOT assume that they aren't liable. While they may not be directly liable for your CC debt, your estate most certainly is which means you need to determine who it is you want to be the beneficiary of your home and assets and such, your family or the blood sucking credit card companies. I just went through this a few years ago.

[Statistical]

51. If her estate has value she can't avoid paying debt after death

creditors will be ahead of family members.

Otherwise imagine this scam:
I am terminally ill, I max all credit cards to acquire $500,000 in gold coins.
I die and leave gold coins to my son.
Sorry creditors he is half way to millionare and you get stuck holding the bag.

There is no way for the estate to avoid paying the creditors. You can't will a house to someone and somehow avoid creditors getting first crack at it.

You can structure how the debts are handled but they will be handled.

If debts > value of estate it likely doesn't matter because creditors will take everything when you die (states usually allow an exception for certain amount in assets of personal value).

[forum slut]

54. not entirely true. Credit Card debt can disapear if it is done right.

or it can eat up anything that the beneficiaries might be entitled to if it is done wrong. I have played this game before. It pretty much requires a lawyer though.

[akbacchus_BC]

52. No, your family members are not responsible for your debts especially

if they are not a co-signer for your credit card. However, if you do not make a will, I think the credit card company will try to recoup from your estate.

It is always good to make a Will (look at who is giving advice) but the laws in the US maybe different from the ones here in Canada! Creditors will come after your estate if you don't have a Will.

[kenny blankenship]

57. Not now maybe, but by the time you die it will be true

They never stop. Ever.