Can a bank collect a credit card debt owed by your deceased parent or spouse? Are you responsible? The answer depends on a range of factors, from whether it was a joint account to where the deceased person lived. Whether Kansas City, Missouri, Kansas, or elsewhere, many answers are the same, but some may be different.
By Stephen K Lehnardt
So, how to handle debts after death? This practical question all too often seems to be the monkey wrench thrown into the estate administration. Few of us leave this life without something lingering in our accounts payable. Unfortunately, too many families do not know which debts live on after their loved ones are gone. As a result, some debts are unnecessarily repaid.
MoneyTalkNews addressed this issue in a recent article titled “Debt After Death: 10 Things You Need to Know.”
The central bit of wisdom in the article is the monumental difference between the deceased debtor (the one who took on certain debts) and their heirs. Problems arise very quickly for the heirs when they blur that boundary.
Generally, when a debtor passes away, their debts do not transfer to heirs or other family members. The debts fall exclusively to the estate and the probate process, and the creditor can only look to the estate for payment.
As a court proceeding, officially, probate varies in some respects. Nevertheless, probate is the proper forum to deal with debts after death. This is the period when creditors can make their claims. Everything should be done to ensure that creditors get funneled into the probate process without disturbing the family. More specifically, creditors should be pointed to the executor. In addition, all avenues of credit and credit reporting should be informed and closed off.
You need to be careful of course, there are certain debts where heirs are or can be liable—especially when it comes to assets for which the heirs have co-signed or co-guaranteed.
Take a look at the 10 tips in the original article and be sure to consider them, because creditors are not always honest. Some creditors are not ashamed to pester a grieving family. Even if you have no doubts, it is good practice to review any debts that exist in the estate with an attorney before you take any action.
Reference: MoneyTalkNews (October 7, 2013) “Debt After Death: 10 Things You Need to Know”