If a credit card is in my deceased spouse's name, am I responsible for paying the balance?
My condolences on your loss. If you remember anything I am about to write, please let it be this: Do not believe legal advice from collection agents. The legal advice collection agents tell people is usually incomplete or wrong, and is always self-serving.
Some people assume a decedent’s debt is forgiven or possibly written off by creditors. The law does not work that way, with the exception of federal student loans. However, spouses or other relatives are not responsible for the decedent’s debt automatically, either. Many collection agents take advantage of a debtor’s grief and ignorance of the law to imply the family must pay the decedent’s debt, but that may not be the case.
When a person dies with a will, the will controls the financial affairs of the decedent’s assets, which is called the “estate.” A will distributes assets, not debts. However, before any assets can be distributed to the heirs, all known debts must be paid by the executor. Therefore, the executor will sell assets in the estate to pay for any debts that remain. Only after the debts are paid will the remaining assets be distributed among the beneficiaries of the will.
If a person dies without a will, this is known as “dying intestate” in lawyer-speak. In this situation, the court appoints an administrator to handle the distribution of the decedent’s assets according to the laws of the state. As with dying with a will, assets are distributed after debts are paid.
Here is a key point: If the estate is insolvent the creditor has no legal right to collect the debt from family members, children, or friends. There is no feudal debt bondage that ensnares an entire family, at least not in the US. In most states, the creditor cannot collect from the spouse either. However, in community property states, the question becomes more complicated.
Generally in community property states, debt incurred by a spouse for the benefit of the family is considered a “community” debt, and therefore the spouse is responsible for repaying that debt.
Did the credit card debt here benefit the community? We cannot answer that question. You may or may not have liability for this credit card debt debt based on your state’s community property laws. Consult with a lawyer in your state to analyze the debt.
Let us say for the sake of argument you do not have liability for this credit card debt. You cannot stop here and call it a day. You must review your state’s doctrine of necessaries rules, too.
Many, but not all states have a “doctrine of necessaries” rule. The doctrine on necessaries rule requires spouses to pay for each other’s necessities of life. The doctrine also applies to parents of minor children.
If your state has a doctrine of necessaries rule for spousal debt, you may have liability for your spouse’s “necessities” debt, even if you were completely unaware of the expense. See the Bills.com article Doctrine of Necessaries Rules For Each State to learn the rules for your state.
Do not assume you have liability for your deceased spouse’s credit card debt. Consult with an lawyer in your state to understand your rights and liabilities in your particular circumstances.
For additional information, see the Federal Trade Commission documents Paying the Debts of a Deceased Relative: Who Is Responsible? and FTC Issues Final Policy Statement on Collecting Debts of the Deceased.
I hope this information helps you Find. Learn & Save.