If Your Adult Child Dies, Do You Have To Pay His Credit Card Debt?

Reader Mat has a question. His uncle passed away a few days ago and his credit card company is telling his grandparents that if his bank account can’t pay the balance — they’ll have to. He’s wondering if this is true.

Mat says:

My uncle just pasted away a few days ago. My grandmother tried closing his Amazon Visa credit card account. When she was on the phone with the representative they informed her that if his bank account did not have the money to cover his debt, then my grandparents would become responsible for paying it all off. I remembered reading the article on taking your parents debt.. In the article you said it only becomes your debt when you are listed as a co signer. They are not co signers. Does that apply in death too, or are my grandparents going to end up gaining his debt?

First of all, we’re sorry to hear about your uncle, and sorry that his credit card company is misleading your grandparents.

No, you are not responsible for the debts of family members who have passed away in most circumstances. If you are in a joint account or have cosigned that debt, it gets more complicated and you may have some responsibility.

CreditCards.com has this to say about what happens to your credit card debt when you die:

Here’s the simple part: If the card was yours alone, with no joint account holders, the debt is yours alone, too.

When you die, your estate is responsible for paying off the balance. If the estate goes through probate, your administrator or executor will look at your assets and debts and, guided by law, determine in what order bills should be paid. Remaining assets will be distributed to heirs by following your will (if you have one), or state law (if you don’t).

Based on your description of the situation, your grandparents should disregard what they were told by the credit card company.

What happens to credit card debt after death [CreditCards.com]

Comments

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  1. JoeDawson says:

    That is horrible, and illegal. Is the OP sure its the Credit Card company calling (a FDIC registered BANK) vs. a collections agency?

    • sleze69 says:

      I know it is wrong in a moral sense but is it illegal for them to lie or “be wrong?”

      • GearheadGeek says:

        It is probably not illegal for them to “be wrong” in this case, but they are held to a higher standard since it’s their business, and it’s not unreasonable to say that they should know credit laws if they are offering credit cards.

        I am not a lawyer, but I’d guess that it’s illegal for them to lie in this fashion, since they are essentially attempting to defraud the OP’s grandparents by convincing them to pay a debt they do not owe through deception.

      • drdom says:

        No…it’s illegal, and is a violation of Federal laws. Any credit card issuer or collection agency must be aware of Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692-1692p.

        If you are in the business of collecting debts, or are a credit card issuer, you are required to know and to follow the law, and to be aware of what you can and cannot do. This law has been around since 1966, so it’s not like it’s something new.

      • redskull says:

        If you or I thought parents are responsible for a dead child’s debt, we would be “wrong.” We don’t know the ins and outs of the world of finance. A financial institution deals with this kind of thing on a daily basis, so there is absolutely no excuse whatsoever for them to believe the parents should assume the debt.

    • samurailynn says:

      The story said that the grandparents (parents of the uncle) called the credit card company to close the account. It’s possible that they are returning a call from a collections agency, but it sounds more like they called the number on the card.

    • Brontide says:

      Is it possible that the CC company can’t close an account with a balance due. It will become past due and end up as a responsibility of the estate.

  2. JoeDawson says:

    That is horrible, and illegal. Is the OP sure its the Credit Card company calling (a FDIC registered BANK) vs. a collections agency?

  3. microcars says:

    don’t close this card out! Use it to pay for his funeral expenses first and THEN close it out!

    • Blueskylaw says:

      Then the grandparents will need the Ghost Hunters to explain to Amazon Visa how he was able to sign an agreement, swipe a card or place an order while deceased.

    • outoftheblew says:

      That would constitute credit card fraud, since it’s in the deceased’s name.

    • dougp26364 says:

      Nice thought but then they’d be breaking the law as well. They might even inadvertanly put themselves on the hook to pay the bill since it could be shown that they had used the card.

  4. Blueskylaw says:

    Unless they co-signed, any money from his estate should be used to settle obligations. If he has no estate (assets) then Amazon Visa is out of luck.

  5. lalaland13 says:

    Damn that is low. I’m pretty sure debt collectors have to check their soul at the time clock. Once I was getting harassed by people for stuff from my mother’s bankruptcy (including some parent loans for my college), and I tried to pull the “I’ll call the police” card. The liar on the phone said, “Oh we’ve already talked to the police. They said you should be arrested.” Ha!

    • nonspecificwife says:

      I dont know about other collectors for me personally, I felt like I was checking my soul at the door. Even worse, I worked for auto loan company so people were already in dire straits and I was saying that I was going to take the car which was often the only way to get to work. After two years, I quit because I couldn’t take another day.

  6. kwm7c says:

    Unsecured debt? No co-signer? Bank is SOL. That’s how it works.

    Blow off the bank, if they sue, meet them in court. Be sure to countersue if they harass you.

  7. morlo says:

    Why would you even think about paying? What are they going to do, ding the dead guy’s credit report?

    • Cameraman says:

      Exactly. I wouldn’t even try to close it, rack up as many late charges as possible. If they try to collect, laugh and hang up.

      My sympathies to OP and family. This must be a terrible time for you guys.

      • morlo says:

        That is crossing over into possible criminal fraud or at least “unauthorized use” charges

        • Cyberxion says:

          No, late charges. Not additional purchase charges. He wasn’t advocating theft or fraud, he was basically suggesting that the OP let the card sit open, being that it’s neither his nor his grandparent’s responsibility to close it.

  8. Cant_stop_the_rock says:

    I think this article should mention which bank is misleading the OP’s grandparents. My Amazon Visa is a Chase card, but I’m not sure if they all are.

  9. watson2001 says:

    The answers given are partially correct. The grandparents would not be personally responsible for the debt on the credit card. The estate of the deceased owes the money. This much is clear.

    Presumably, there is somebody who is acting as the administrator of the deceased who is responsible for disposing of the Uncle’s estate. If this is grandparents, they should arrange for the leftover assets of the Uncle’s estate to pay for these debts. Problematically, if the grandparents received money from the Uncle’s estate, there could be a claim against this received money, which could make the grandparents responsible up to the amount of money received from the Uncle’s estate.

    The best thing to do is to send a letter to the credit card company saying (1) we are not the deceased, (2) we did not co-sign on his unsecured loan, (3) if you need to stake a claim against the deceased, please contact his administrator at XXX, (4) any further letters received from you implicating us as debtors will cause us to retain counsel and we will pursue all legal remedies that we are entitled to utilize.

    • sven.kirk says:

      This is the best/correct answer.

      • pot_roast says:

        Agreed. Also be sure to send everything certified mail with the green signature card as well. Keep a log of everything, and receipts. This is very very important.

        Never deal with debt collectors over the phone. EVER.

        • soundreasoning says:

          I agree with all of this aside from the comment about the executor setting up an account. An account can be set up, and maybe should be depending on the estate’s size, but different states have different rules so this may or may not be necessary.

    • Nytmare says:

      The executor sets up an estate account at a bank or credit union, and moves all his money and liquidated assets into it. The executor pays off his bills using this money, and the remainder is what goes to his heirs or whatever the will says.

  10. consumerd says:

    rule #1: A credit card company or collections company will say anything to get paid, even if it is a complete lie!

  11. Julia789 says:

    Even though the parents are not obligated to pay the debt, I’m sure it’s a standard last-ditch effort by the credit card company to get someone to pay the bill, hoping the relatives will unaware of their rights. Perhaps the CSR on the phone gets some kind of bonus or commission if they can get the family to pay the balance.

    It’s scummy and illegal, but I’m sure few people report it or sue, so it’s going to keep happening. I’m sure many grieving relatives just pay off the debt while still too upset to realize they’re being had.

  12. onyxruby says:

    Ack, used to work large balance and fraud in credit for a living and need to set this straight…

    Here’s the deal on credit card and other debt. If you are a co-signor or spouse you are responsible for the debt in the event of death. Even in cases like divorce with a decree from a judge saying the other person is responsible, you are still on the hook (all that does is give you the legal right to sue to recover what you have paid).

    In the event of death with no cosigner or spouse the bill is assigned to the estate of the deceased. Think of death an an end of life bankruptcy and you will have a pretty good guide on how it is handled. Ultimately, the trustee is responsible for distributing the assets in such a manner that the debts are paid and the heirs receive there due. Even in the event that you are the trustee, you personally are not responsible to pay any bill with your own resources.

    In the event that sufficient resources exist to satisfy all debts than the trustee must use the assets of the estate to pay those debts. When those assets run out the trustee has no further obligation other than to supply proof of death (death certificate) and if needed prove that all assets were distributed. It can be a lot of hassle for the trustee which is why in many states the trustee is automatically granted 10% of the estate above and beyond what they would otherwise receive.

    In plain English “if you are not a cosigner or spouse, you have no legal obligation to pay another persons debt”.

    • carlogesualdo says:

      This article isn’t about this, but I’ll bite… Actually, just because you’re the person’s spouse doesn’t automatically make you responsible for the debt. Every state has different laws on the matter. It’s quite possible if the account wasn’t created as a joint account, the spouse didn’t have charge privileges, and you don’t live in a community property state, there’s a good chance the account goes into the estate when the person dies rather than reverting to the spouse – who by the way never had any access or authority over the account. This can especially be true if the account was opened before the marriage. I’m not a lawyer or a financial expert, but if I found myself in this situation, I’d certainly check with a lawyer!

      • PresidentBeeblebrox says:

        I’m a lawyer and I’ll bite on this hook. Generally speaking, there is no obligation to pay a spouse’s debts unless they are joint debts. As stated above, there are exceptions from state to state, esp. if it is a community property state. But if a CC account is not a joint account – ie, the deceased spouse holds it in his or her own name – the surviving spouse is not obligated to pay it.

        The administrator of the estate is, however, obligated to try to pay as many debts as possible. The process is as stated earlier: marshal the decedent’s liquid assets into a bank account, sell any property if so directed in the will, pay the decedent’s debts, and then pay the beneficiaries. If the surviving spouse is the sole beneficiary, then that’s easy as pie.

        If the decedent died with more debts than assets, then it’s a negative estate and the creditors will have to take what they can get.

        OP should consider contacting his or her state Attorney General’s office. The CC’s attempt to collect a debt from someone who is not legally obligated to pay it may constitute consumer fraud or a deceptive trade practice.

        I know for a fact that collections companies try hard to collect deceased persons’ debts from people who are not legally obligated to pay. It’s scummy and it’s wrong.

        • EarlNowak says:

          I’m a lawyer and I’ll supplement your answer- in my state (community property), ostensibly separate debts incurred for the benefit of the marriage (groceries, bills, rent, etc.) are considered as community debts and both spouses are jointly and severally liable. This has to be proven in court by a facts and circumstances analysis, however. Debts not for the benefit of the marriage are not community, and the other spouse is not liable for them. (Generally. Some exceptions may apply).

          However, the community terminates at divorce and all property and debts are divided at that point, so you can not be on the hook for an former spouse’s debts unless you co-signed or are a joint accountholder.

    • Seanumich says:

      You are absolutely WRONG. A marriage in most instances does not obligate you to the others debts. With a divorce the card should no longer be considered a joint card, and therefore th either spouse has no legal obligation any more than if I dated someone. I would say the fact you say you worked in this field shows your company lied to you about the law to confuse customers.

      • Julia789 says:

        I think spouse’s responsibility for the other’s debt varies by state law. Would be best to consult a attorney specializing in finances or bankruptcy in the state the person resides.

  13. lincolnparadox says:

    OP, I’ll keep your uncle in my prayers. I’m sorry for your loss.

    CC companies will do everything that they can to squeeze a few more cents out of the deceased. Meg’s post is 100% correct. If the company keeps harassing your grandparents, lawyer up and sue the corp. All of this stuff should be handled in probate. Focus on family, right now. The legal and financial stuff will work out later.

  14. Wafflemaker says:

    That is DISGUSTING to try and weasel money out of a mourning parent. My goodness.

  15. SugarMag says:

    Very upsetting to hear such lies told by CC companies. (this is over the line IMO)

    I am grateful when I was an executor for both my sister and husband’s estate, I was never misled in this way. Each party I spoke with re: an unpaid debt was courteous and informative, including Sallie Mae and the IRS. They simply asked for a copy of the death certificate and proof I was power of attorney to get things moving.

  16. SaraFimm says:

    When I first worked at a Credit Card Company back in the early 90’s, I worked in the beginning stage of collections. We would get the overflow from customer service and people who had received a recorded call from “the bank”. We were told we had to be very CSR-y, but still ask for money if it showed up on the computer screen. I can’t tell you how many times we received a call from someone over 40 who had a child or parent pass away. We had been told to ALWAYS try to collect on the amount due. When someone, usually a child or parent, called in and said the cc owner had died and inquired about the amount due I always had to skirt around the issue since they weren’t the cc owner and yet STILL try to collect on the debt; “If the bill you received says $XXX.XX amount is due then that is what is due.” etc.

    Then the minor recession hit and we saw people falling past due more and more and it was like a huge scary wave rolling across the nation starting in New England and the East Coast and spreading westward until it hit the West Coast, Hawaii and Alaska last.

    Soon after that, we were finally told that if a caller told us that the cc owner died to automatically tell the caller to send in a death certificate and put a note on the computer file about it and stop trying to collect on the debt. Sometimes, we would get the same person calling a few times because of how long it took to get the death certificate and get it processed. I hated trying to intimidate people into paying on a dead persons account and it felt really nice and morally correct to finally stop doing it.

  17. oppy says:

    Please update with name of institution. The only power we have is the ability to shine a light on their sh!tty practices.

    Oppy
    http://moveyourmoney.info/

  18. nonzenze says:

    In the event of death with no cosigner or spouse the bill is assigned to the estate of the deceased. Think of death an an end of life bankruptcy and you will have a pretty good guide on how it is handled. Ultimately, the trustee is responsible for distributing the assets in such a manner that the debts are paid and the heirs receive there due. Even in the event that you are the trustee, you personally are not responsible to pay any bill with your own resources.

    Sure, except that the bankruptcy analogy implies there’s not enough money in the estate to cover all the debts whereas usually in probate there are assets to be distributed. The credit card company will get paid out of those assets before the estate is divided among the beneficiaries.

    Except in the rare cases where people die with literally nothing to give their relatives, it seems like 6 of one, half dozen of another.

    • onyxruby says:

      Even in bankruptcy you can end up with enough assets to pay all bills that are owed. Bankruptcy simply means that you are incapable of paying your present bills with your present income. That’s why bankruptcy if often referred to as a liquidation. In fact bankruptcy can be performed involuntarily on someone (most famous example is OJ Simpson) just to force the liquidation to occur.

      The analogy to bankruptcy is quite accurate, they both use the same terminology, they both use trustees to distribute the assets of the estate. The biggest practical difference with bankruptcy is that you get to exempt certain things that your estate in death can’t. If your near death, and in great financial despair, you might as well declare bankruptcy to leave something more for your heirs.

      The process of liquidating assets and paying off debtors is essentially the same for both.

  19. Eyebrows McGee (now with double the baby!) says:

    Updated aphorism:

    There are lies, damned lies, and collections agencies.

  20. MsAnthropy says:

    Amazon Visa? That’s Chase. Classy, Chase – realllll classy.

  21. MrEvil says:

    Credit card companies do this in order to dupe the unsuspecting bereaved into paying a debt they have no legal obligation to repay. So yeah, if you have a relative die and some debt collector is hounding you to pay off his/her debt tell them to get bent and take it up with whomever is handling the estate. Though once the estate is out of probate anyone else that’s owed money is shit out of luck.

  22. Awesome McAwesomeness says:

    Not only is the CC company lying, what they are l=telling grandma is ilegal. She should tell them she is recording their conversation becasue she wants to take it to her lawyer and make sure that everything is done right. I’ll bet they will change their tune then.

  23. JonBoy470 says:

    Tell the credit card company to suck it. The account holder is dead and there’s this little thing called “Probate”

  24. dougp26364 says:

    So long as it’s not a joint account, I’d be telling Mr. Credit Card Collector to go ahead and ruin his credit and then see if they can get him into court. My bet is that his attorney will show up to represent him and then be asking you why you’re outside the fair credit collection act. Who knows, he might even have a few papers he wants to send you. Now, just so I have it correct, what’s your full name and address so I can get this process started right away.

  25. FrankReality says:

    I’d tell the credit company they need to work that out with the estate. And if I were the administrator of the estate, their claim just got put on the bottom of the debt pile and would be paid LAST – if there are remaining assets to pay out. ;-)

    Second, I’d file a complaint with the Attorney General of the state in which she resides. This is an unethical and illegal – and very tacky.

  26. dg says:

    If your grandparents are NOT your uncle’s legal guardian, then they have ZERO obligation to pay off any of your Uncle’s debts. Now if they were granted conservatorship, or guardianship of your uncle because he was an invalid, or mentally retarded – then that’s something different and they’d be responsible for paying that off because technically, your uncle would be basically considered a “minor” child.

    If they are the executors of your Uncle’s estate, and he had a will – they get to execute the will according to the terms and conditions of that document. If your uncle put money into a trust, and it was set up in a certain way – then the funds in the trust can only be used for the purposes defined in the trust documents and whomever the Trustee is has a fiduciary duty to ensure that the Trust is utilized in the manner set forth in those documents, or distributed according to the trust docs…

    If your uncle didn’t have a trust – then there’s a specific order in which monies get disbursed for bills due and payable. Funeral expenses come first I believe, and I’m not sure what’s next on the list – but secured creditors would come before “unsecured” creditors. Secured creditors are mortgages and the like. Unsecured creditors are credit cards and payday loans, utilities, etc…

    If your uncle was renting an apartment, the family usually cleans up everything, and the landlords give back the security deposit to the estate.

    If he had a condo or house – look at continuing to pay the mortgage, or rent out the property until it can be sold. Otherwise if it’s not worth dealing with, let it foreclose.

    If your grandparents were authorized signers on any of his bank accounts – they should simply go to the bank and WITHDRAW everything. Close the accounts. Don’t say “Joe Bob’s dead” – just “we’re closing the account” – end of story. Then move all that cash somewhere else. That way it’s more difficult for some sleezy creditor to attach it and potentially freeze the account – once you guys have control of it, things are on your terms.

  27. quail says:

    I wonder how old the uncle was and if he died without a will that named an executor to his estate. How do most states handle that? Is it given to a close relative to handle? Is it automatically handed to an overworked state caseworker?

    The credit card company is pushing for its money, and isn’t stating the facts. But would it ever be right in assuming that the grandparents would be handling their child’s estate?

    Curious about this because I have several elderly relatives without wills to their names.

  28. mopman64 says:

    if it is not a joint acct, they dont need to pay a dime. I hate it when cc try to do this with family members. All the family has to do is call and ask for the dept that handles death and tell them the is an estate or is not an estate, my cc will probate the name anyway, they will ask some basic info and will ask for a copy of a death cert which you can fax to them.

    If there is an estae the bills will need to be paid if not dont pay them a dime. They will try to tell you the bill needs to be paid tell the to stick it.

    Trust me on this one, had it happen when my dad passed, these cc’s tried to get my mom to pay, I called my lawyer and he told me what I just told you. If they arnt joint you have no prob.

  29. imthemommy says:

    My sympathies to the loss that the OP and and family suffered. :-(

    If the deceased has an estate, that will all be worked out through the courts. His parents are in no way obligated for that debt. Either don’t take the calls or laugh at them if you do. If they get something out of the estate or probate, so be it….if they don’t, there is nothing they can do about it. Truly a horrible collection tactic!!! I have to wonder how many people have actually fallen for this and paid a deceased debt based on being told this. Very sad indeed!

  30. JollyJumjuck says:

    I wonder if Amazon Visa offered a free dance on the dead uncle’s grave as well?

  31. edrebber says:

    Ask for a written copy of that policy for your records. When they refuse, tell them to urinate up a rope.

  32. MJ Dick says:

    Tmobile is the same way. I was previously employed by Tmobile, and if someone called in to say that the account owner had passed and needed to close the account, we would give condolences, then close the account, on the grounds that the final dept was settled by someone. when I asked management if this was a legal obligation that was in the contract, I was reprimanded for confusing everyone on the policy, even if I was only asking about a contract issue.

  33. icedteagirl says:

    I’m at the end of the long process of being the administrator of an estate. The person who died (family member of mine) had a ton of credit card debt. And no will (augh!).

    First, I would definitely recommend getting an attorney to help manage estate issues. I know they can be expensive, but it was REALLY worth it (and I got reimbursed from the estate funds for it). I had no idea how to handle an estate and definitely would have made some serious mistakes if I didn’t have that advice. My attorney told me that if, in my case, there was not enough money in the estate account (which comes from unclaimed paychecks, any assets in bank accounts, investments, etc) to pay off everything that was owed (funeral expenses, car loan, etc) that there is a very specific order of what debts gets paid first (reimbursement for funeral expenses are at the top of the list, according to the law where I live). So, things get paid off in a specific order, and if we run out of money, then we have to go to a debt and demands hearing to figure out what happens afterward. But no money should be going towards credit cards that is not part of the estate. I didn’t pay a single credit card bill that wasn’t mine, and notified the companies (with a death certificate) that they had died and I would be in contact once we had gathered all the assets for the estate acct.

    Hope that’s at least somewhat helpful. I know all cases are different, but that’s how its worked for me. And the law could be different where you live, but an attorney would probably help a lot. And they can be the point of contact with the credit card company so you won’t be hassled as much.

  34. ahleeeshah says:

    They will tell you anything and say anything to get you to cave in. I have had people call and say an employee’s mother is sick and they need to talk to them immediately, I’ve had people say they can’t remove a work number without permission of the account holder, I’ve had people flat-out lie and say they aren’t with a collection agency after I googled the account name and phone number, I’ve even had a guy tell me Santa Claus wasn’t going to come because I wouldn’t let him talk to an employee. Good times.