Legal Liability of Heirs in the Event of a Credit Cardholder’s Death
When a death occurs in the family, it’s natural for some things to fall behind. Unfortunately, this can become a problem if you forget to pay off a credit card — especially if you also have a legal interest in that card.
The good news is that a late payment doesn’t necessarily have to hurt your credit if the account isn’t yours. A lot depends on your situation. If you’re an authorized user, you should be able to remove the late payment from your credit report without much hassle. But you may have to jump through other hoops if the account is joint or you’re a co-signer.
Debt Liability
Determining your status on a credit account is the most important step you need to take when someone with a joint account dies. That’s because there’s a big difference between an authorized user and a co-owner or co-signer.
If you’re a co-owner or co-signer, you are legally liable to the credit card company. If you’re an authorized user, you have the right to use the card but no obligation to pay.
While the card’s payment history may appear on your credit history if you were an authorized user, you should be able to remove yourself from the account. Upon death, the person’s estate is usually responsible for the debt. Be warned. You’ll need to stop using the card once they die.
Since you have no legal responsibility for making payments as an authorized user, the credit card company can file a claim against the estate to get payment — but they can’t take any action against you. If there’s money in the estate, you’ll likely get paid. If not, the debt will likely be written off. Laws may vary by state.
If you’re a joint owner or co-signer of the account
Things are a little different if you’re a joint owner or co-signer of the account. In that case, you have joint legal responsibility for paying your credit card bills.
That doesn’t necessarily mean you’ll have to live with the black mark on your credit history that came from late payments. Your best option may be to call or write a letter to your credit card company explaining what happened and asking if they would be willing to remove the delinquency from your credit history. Credit card companies are not obligated to honor your request, but they may do so as a gesture of good faith, especially if you explain that your parent passed away and you have since become a creditor on the account after the delinquency.
However, remember that you are responsible for the account as a co-owner or co-signer and must pay the card on time and in full.
If you are not sure whether you are an authorized user, co-owner, or co-signer on the account, contact your credit card company as soon as possible to find out. This will help you decide what direction to take next and how to fix the credit mess caused by your family’s loss.
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