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The death of a loved one – Credit card companies and other creditors do not wait for the grieving process to end

Even when one’s death does not necessitate probate administration, surviving heirs will likely encounter alleged creditors of their lost loved one. The creditors may learn of one’s death when they do not receive any payments for several months and assume the debtor passed, or when a family member notifies the creditor.

Additionally, a personal representative of an active probate estate may notify a known creditor upon appointment, to start the applicable time period for which to file a claim against the estate.

Most creditors are hospitals or credit card companies and their respective agents. Sometimes the creditors open up estates to become administrators of a debtor-decedent’s estate. The creditor then files a claim against the estate to obtain a judgment, and then attempts to attach a judgment lien to any non-probate assets. The creditor may not care if the lien is actually valid.

A creditor may also elect to let the matter go, either because the period for filing a claim has expired, it is cost prohibitive to file a lawsuit where a claim is rejected, or the amount is too small. Sometimes a creditor may go on a fishing expedition to see if the personal representative will automatically pay a claim made against the estate. When the personal representative rejects such a claim, this creditor elects to go fishing in other waters.

As an heir/beneficiary, it is important to remember that in some cases, mainly with credit card companies, a surviving loved one may be responsible for a credit card or other account balance. You will be responsible in generally three situations. First, if you are a joint cardholder/account holder with the decedent, or a co-signer/guarantor for the decedent. You may not be liable for the balance if you are only an authorized user of a credit card, however.

Second, if you are divorced from the decedent, the separation agreement/divorce decree may not specify who is responsible for certain credit card debt. If an ex-spouse dies before satisfying the entire debt, you may be liable for the balance. If you live in a community property state instead of a marital property state and do not hold property separate from an ex-spouse, you could also be liable for payment of such balance.

Third, you use the credit card or account after the death of your loved one. Not only could you be responsible for the debt as an unauthorized user but also you may be liable for credit card fraud. The creditor will attempt to prove that you knowingly incurred debt on behalf of the deceased debtor whose estate did not have the means for which to satisfy such debt.

Always consult with a probate attorney for matters related to a probate estate, especially with estate debts and alleged claims against an estate.

** This article is intended to be used for solely educational and informational purposes, and is not to be understood as legal advice or any offer to provide legal advice.


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