How to Manage Credit Card Debt on Cardholder's Demise
The passing of a beloved family member brings immense grief and upheaval, but life must go on. When a parent passes away, their financial legacy includes both assets and liabilities. Consider the points mentioned below to manage credit card debts left behind by a deceased loved one.
Do the Surviving Family Members Bear Responsibility for the Credit Card Debts?
Unless there are co-signers or authorized users, the surviving family members are not held accountable for the credit card debts of the deceased. While your heirs may inherit other assets, they are not legally entitled to take on your credit card balances. However, creditors may still contact you and demand payment of outstanding debts.
Estate Administrator of the Deceased
Even though heirs are usually not responsible for the debts of the deceased, the debts don't disappear. Instead, the responsibility for the debts is transferred to the estate of the deceased. Upon death, the deceased person's estate is established, and an administrator is appointed by the court to manage all of the financial affairs of the deceased, including their debts.
Informing the Bank, Credit Card Company and Credit Reporting Agencies
It's essential to promptly notify all relevant financial institutions of the death to prevent identity theft. Credit card companies, in particular, typically require a death certificate as proof. It's recommended to do this as soon as possible after the passing of the individual.
Stop using the Credit Accounts of the Deceased
Authorized cardholders are not responsible for credit card debts, but using the card after the primary cardholder's death could be considered fraudulent.
Request Assistance from the Creditors
If the deceased had a joint credit card with their spouse, their passing leaves behind not only a credit card debt but also a loss of income. It's possible to negotiate with the credit card company to adjust the payment terms to suit your circumstances for a temporary period.
If you have received an insurance benefit due to the death of a loved one, it's wise to settle any outstanding credit card debt promptly. Credit card holders should disclose their financial status to a trusted relative and share information about any assets or liabilities their survivors may need to handle after their death.
FAQs on How to Manage Credit Card Debt on Cardholder's Demise
- How should the credit card issuer be informed about the cardholder's passing?
The family or the legal representative of the deceased should get in touch with the customer service of the credit card issuer to communicate the cardholder's death. The issuer will guide you through the necessary documentation and steps required for closing the credit card account and settling any outstanding dues.
- Can a family member continue using the credit card of the deceased individual?
No, after the cardholder's demise, it's inappropriate for anyone else to use the credit card. Any transactions made on the card after the cardholder's death might be considered unauthorized, potentially leading to the family being held liable for such transactions.
- Will the credit card issuer forgive the outstanding balance if the cardholder passes away?
Some credit card issuers provide features such as 'credit shield' or 'credit protection,' which could cover the outstanding balance in the event of the cardholder's death. However, this practice is not universal and varies based on the terms and conditions of the specific credit card.
- What documents are necessary to settle the credit card account after the cardholder's passing?
You will need submit a copy of the death certificate, evidence of the relationship between the deceased and the person managing their affairs (like a legal heir certificate or a will), and any additional documents requested by the credit card issuer.
- Can credit card insurance be beneficial in this scenario?
If the deceased cardholder held credit card insurance that covers outstanding balances in the event of death, the insurance could aid in repaying the debt. Nevertheless, the coverage and terms of the insurance policy should be verified with the credit card issuer.
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