If you incur credit card debt, you must typically make monthly payments until you have repaid the debt in full. However, you may wonder what happens if you die with unpaid debt. In most cases, your estate is responsible for paying your debts, including those you incurred with credit cards.
Decedent Debt
When you die, the court appoints an estate representative, who may be a third-party administrator or an executor you designate in your will, to handle your final affairs. Your estate representative is responsible for taking inventory of your assets and using them to pay your debts. Once he has paid all of your debts, the estate administrator distributes your remaining assets to your heirs and closes the estate.
Process
After the court appoints your estate's representative, the representative must inform your creditors that you have died and allow them time to file claims against the estate. If there aren't enough assets in the estate to pay all of the debts, the estate representative must pay the debts in order of importance. Once he has depleted the estate's assets, the representative must send letters to the remaining creditors informing them that they won't receive payment.
Implications
Each state determines the order in which the estate representative must pay debts, but unsecured creditors typically receive payment last. Since credit card debt is usually unsecured, it frequently remains unpaid when an estate is insolvent. However, if a creditor had obtained a judgment before your death, the court will consider him a secured creditor, and he may receive payment before the estate's assets run out.
Considerations
If there aren't enough assets in your estate to pay your credit card debt, creditors can't collect typically collect from your spouse, children or other relatives. However, if another individual cosigned for the debt and your estate isn't able to pay, the creditor can demand payment from the cosigner. If the cosigner can't pay, the creditor can file a lawsuit against him.
0 comments:
Post a Comment