The death of a spouse can bring about great confusion surrounding financial responsibilities. The living husband may wonder who will pays the outstanding bills of his deceased wife and whether he could inherit debt. The laws regarding the passing of debt vary based on who incurred the debt, who agreed to pay the debt and whether the deceased's assets cover the bills. If your deceased wife incurred a debt alone, the debt can die with her so long as she has no assets that go through probate to be seized by creditors.
Where There Is a Will
When you die, your estate is responsible for paying off your outstanding debts. If you are the administrator of your deceased wife's estate, you are required by law to examine your wife's remaining assets that are her's alone and determine in what order her bills should be paid. The remaining assets go to her heirs, as specified by her will if she had one. If there isn't any money left over to pay all the bills, you must notify the debtors that the estate is insolvent and the creditors must write off the debt. In most cases, creditors cannot require a family member to pay the bills. That doesn't mean they won't try to get you to pay, however. Also, certain assets, such as 401(k)s and life insurance don't go through probate and are not required to be used to pay off a deceased spouse's debts.
Debt Collection After Death
In cases where there is enough money left over to pay debts after your spouse's estate goes through probate, the Credit CARD Act of 2009 requires creditors to inform you of the amount owed quickly, and immediately stop assessing fees and late penalties while the estate is being settled. This law went into effect in 2010.
Joint Accounts and Authorized Users
If you are named as a joint account holder on any of the bills that are outstanding when your loved one dies, you are liable to pay the debt. This also applies to business partners who may be on joint business credit accounts. Those who are merely authorized users are not required to pay the debt.
Be Proactive
When a spouse passes away, experts at Bankrate.com suggest that you gather the bills that were solely hers and notify her creditors right away. Many will ask for copies of her death certificate and advise you to send them via certified mail. Experts also recommend keeping any notices or obituaries that are published in your local newspaper.
When working with your wife's creditors, it may be a benefit to you to take over the account if allowed. For example, if your credit is not as good as your wife's, you would have the luxury of an account in good standing provided you can keep up with the debt. If you can handle the payments or the creditor wants to give you different terms, experts recommend that you close the account.
What to do When Collectors Call
The experts at AARP and Bankrate.com say that you should investigate all debts carefully when bill collectors start calling. You should find out the following: is the debt valid, is it still collectible based on the statute of limitations, and are you liable for the debt? AARP warns that you should not make a promises to pay any debt when speaking to a collector, and if you have any connection to the debt, demand proof the debt is valid. Debt collectors often use specially trained collectors to who use sympathy to manipulate relatives into paying bills owed by the dearly departed but for which you have no responsibility. You also do not have to speak to any collector; you can always refer them to the executor of her estate if there is one. You can report any problems, such as harassment by a collector, to your state attorney general and the Federal Trade Commission.
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