A wife's death is certainly a traumatic event. In addition to emotional grief, funeral expenses and related issues may cause financial problems, including default on a credit card owned by the spouse. Although the situation is terrible, the spouse is fully responsible for the defaulted credit card and must accept damage to the credit score.
Contacting Creditors
Creditors should be notified about the wife's death if she had credit obligations entirely in her name. Arrangements must be made to resolve the debts through her estate. Debt settlement is also a possibility. Settlement allows full payment of credit cards and other unsecured accounts for less than the existing balance. An experienced estate lawyer can offer advice on resolving debts after a spouse's death.
Hardship Plans
The surviving spouse should immediately review the impact of the wife's passing on remaining financial obligations. This is critical if the wife earned the majority of the income, and the family had a high debt-to-salary ratio. Credit card companies and other creditors may offer special payment plans to provide the surviving spouse with time to adjust. These plans are sometimes called hardship plans and significantly reduce monthly payments for up to a year. Information on the plans is available by calling creditors directly.
Credit Counseling
Nonprofit credit counselors can also help. Counselors certified by the U.S. Department of Housing and Urban Development offer debt management plans for handling excessive debt. Multiple credit card defaults, charge offs and court judgments are a sign that finances are out of control. Credit counselors also assist with credit repair following a decline in credit score. Referrals for local credit counselors are available through charities such as the United Way.
Credit Score
It is impossible to say precisely how credit scores are impacted by a credit card default. All situations are different. Someone with an excellent credit score of 705 may experience a 75-100-point drop after a default, while someone with a 450 credit score may lose just a few points. Credit scores ranging from 350 to 850. People at the top of the scale tend to suffer much larger credit score drops than people at the bottom when negative information is added to credit reports.
Rebuilding
On-time payments while paying down debt is the best way to rebuild a sagging credit score. Resolve the defaulted credit card by calling the credit card company. Explain the situation leading to the default and offer to pay the full balance in exchange for removal of the default status and related negative information from your credit report. Pay off the card, even if the card company will not agree to the arrangement. Or make payment arrangements if you cannot pay a lump sum.
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