If a family member or other loved one has died, the deceased’s estate may be required to go through the probate process. Probate is a formal process in which the will is verified, and matters of the estate are settled. Probate lawyers in Austin can assist with this process and help you resolve everything respectfully and efficiently.
As you go through probate and work to resolve the necessary financial and legal issues after your loved one’s death, one question you may have is what happens to the credit card debt of the deceased. One recent article published in Chicago Now examined how credit card debt was resolved after a father’s death. While his story is unique to his situation, it sheds some light on how credit cards are treated when someone passes away.
Credit Card Debt After Death
When someone dies with a credit card and a card balance, the credit card company should be notified of the death. Sometimes, the credit card company will require the death certificate to be sent. In the Chicago Now article, however, the author indicated that the credit card company shut off the card immediately even though there were two other authorized signers on the card. It is important to be aware that this could happen, so if there is someone else who is on the card with the deceased and who needs to use the card, you need to be careful about when and how the account is closed.
After the credit card company is notified of the death, the account is generally frozen. As the Chicago Now author reported, the auto pay associated with the account was canceled, and the money was not taken out of the deceased’s bank account to pay the remaining balance on the card. This is because the deceased’s assets become part of the estate, and the creditor may not necessarily have the right to claim the money, even though the creditor is owed a debt.
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What happens next is going to depend upon the situation. If the deceased left behind a will and some assets need to transfer through the probate process, the credit card company is a creditor with the right to make a claim against the estate. This means that the creditor can participate in the probate process and try to get paid back. Whether the creditor will be repaid in full or not is going to depend upon the other claims made against the estate and the amount of available assets.
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If there are no assets that transfer through the probate process, however, then the creditor may have a difficult time collecting the money. For example, if all of the deceased’s assets were in a living trust and there was no money in the estate, the creditor would probably be out of luck. Surviving children and family members are not generally obligated in any way to pay the credit card debt of the deceased, except if the family member has co-signed for the card. Thus his or her own credit is on the line. However, it is all too common that a credit card company will chase down grieving relatives in a callous attempt to be paid.
Understanding how the probate courts will treat a creditor’s claim can be complicated, and it is best to turn to a probate lawyer in Austin, TX for help.