Tuesday, August 30, 2011

What Happens to Credit Card Debt When Someone Dies in Texas?

When somebody close to you dies, you probably aren't thinking about paying her credit card bills for her. However, resolving debts is one of the loose ends you may have to address for your deceased loved one. In Texas, if you were married to the debtor when the debt was incurred, you may be responsible for the debt under community property laws. Otherwise, you are not responsible for the debt unless you had a joint account with the late debtor.

Community Property State

    As of June 2011, Texas is a community property state, which means all debts incurred during the course of a marriage belong equally to both spouses in Texas. Therefore, if a debtor owes money on his credit cards at his death, his spouse automatically becomes responsible for paying those debts. If she does not pay those debts or make suitable payment arrangements, the credit card company can take collection action against her and report her to the credit bureaus for non-payment.

Joint Accounts

    If a non-spouse had a joint credit account with a debtor in Texas, the surviving owner of the account must pay off the debt after the debtor's death. As with spouses, joint account-holders become solely responsible for the debt after an account holder's death, and they can face financial and legal consequences if they do not make arrangements to pay back the existing debt.

Authorized User

    If you are not the debtor's spouse and were an authorized user on her account rather than a joint account-holder, you are not responsible for the debt and do not have to pay the amount owed. Similarly, family members not listed on the account are never responsible for the decedent's debts in Texas. Heirs and relatives do not have to pay these debts after the original debtor dies. If a debt collector tries to collect the debt from you in this circumstance, inform the collector you are not responsible for the debt and ask him to stop contacting you.

Executor of the Estate

    If a deceased person had debts in his name when he died and community property laws don't apply, the executor of the estate must use estate assets to pay off the debt. However, credit card debt is a low priority debt in Texas. If the estate does not have enough funds to pay credit card debts off after paying off other debts, such as taxes and secured debts, the creditor must write off the debt as uncollectible.

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