. . . What is a survivor’s responsibility?
It is happening more and more often. An aging parent, or a spouse, has a balance due on their credit card when they die. The next month, when the bill arrives, should the surviving spouse, or the children, pay it?
The short answer is “Maybe.” Let me explain. The probate estate of the deceased card holder is primarily responsible for the debt. If there are assets in the probate estate (meaning, assets titled in the decedent’s name alone or payable to the estate), then those assets will be subject to the payment of legitimate debts of the decedent. In that case, the creditor files a “claim” against the estate, and receives payment from the executor as part of the estate administration.
But what if there is no probate estate? For example, if all the property is titled in joint and survivorship form with a spouse or children, or is payable to a designated beneficiary, such as a retirement plan, annuity or life insurance, there is no requirement to file with a probate court. If there is no probate estate, then the creditor has no assets against which to make a claim.
We see this situation in many estates we administer. When asked whether the survivors are responsible for the bill, I always respond with “Were you a co-signer or guarantor on the card?” Often they don’t know. If the answer is “No”, then I advise not to pay the bill. If the answer is “I don’t remember”, then I advise not to pay the bill until we learn more. In that situation, our procedure is to write to the company, notify them of the death (sending a photocopy of the death certificate), and ask for documentation of who signed the card agreement. If the creditor can demonstrate that someone else is responsible for the bill, because he or she signed the application or guaranteed the account, then we’ll take steps to settle the debt. But if there is no documentation, then we advise not to pay the bill.
We’ve also seen some new developments in this area. For example, credit card companies and debt collectors have written off a lot of decedent’s accounts, and have become aware of the “no probate estate” arguments. As a result, they are becoming more aggressive in trying to collect the balance due. Instead of trying to file claims with probate courts, they are contacting survivors directly and trying to convince them to pay the bill.
The tactics the credit card companies are using are slick. Improved technology makes it easier to find people. Debt collectors are training their employees to act as if they care – teaching them to be a good listener, be empathetic, use anger-deflecting phrases and prey on the loyalty or morality of the survivor. They offer their employees stress-relieving tools, such as yoga classes, game tables, free snacks, full scale lunches and even the occasional massage. In the final analysis, it’s all about getting paid.
However, many people are unaware they have no legal obligation to pay a deceased relative’s debts. Most debt collectors do not volunteer that information. If asked the direct question – “Am I legally responsible for this?”, they should say no. But you must ask the question first.
Another development is the predatory or bogus “debt collector” who is really just a scam artist. They tend to call loved ones shortly after a death, even before the funeral (they check out death notices for names and addresses). They refer to a “large debt” the decedent allegedly owed, request immediate payment, and threaten “further action.” They don’t name a specific collection agency, and try to pressure the relative into divulging personal information over the phone. It’s a con, and they strike because a family’s guard is down when they are grieving.
The same rules apply in this situation. Know your rights. If you weren’t a co-signer or guarantor on a debt, you have no obligation to pay it. Collectors should deal with an attorney or the executor, not directly with the family. Ask for detailed information from them, including a written demand letter that includes a copy of the document that created the “debt.” If they persist, you can always contact an attorney or your state attorney general’s consumer hotline.