Is Mom liable for Dad's credit card debt?
Dad just died. He had approximately eleven credit cards in his name only. Is Mom liable for his debt? She only recently became aware of his credit cards. Mom does not have the money to pay the debt and has a reverse mortgage on the home.
This sticky but not uncommon situation is handled slightly differently under differing state laws.
As a very general rule, your mom might be liable for your dad’s debts, even those on undisclosed credit cards, if she lives in a community property state, where assets and debts are shared. Community property states include Arizona, California, New Mexico, Nevada, Idaho and Washington, as well as Texas, Wisconsin and Louisiana. In Alaska, couples can opt in for community property.
If your mom does not live in a community property state and was not listed as a joint owner on the credit cards, she has a stronger case for not being liable for the debt your dad incurred.
Legalities aside, the reality is that credit card companies will likely at least attempt to collect the debt from your mom—and they can be notoriously dogged. And if your dad died leaving a will, then his creditors had to be notified of his death, and may get in line to be paid out of the estate assets.
Despite the credit card agencies doggedness, however, they do not have the right to hector your mom or make her life miserable with repeated calls and requests for payment. And even if your mom is legally liable for some or all of your dad’s outstanding debt, another reality is that given the shaky economy these days, most companies are willing to negotiate payment—often settling for pennies on the dollar.
To get free advice and counseling on this matter, encourage your mom to contact the Consumer Credit Counseling Service.
I had to deal with this exact situation. I was caregiver for both my mother and father at the time of my fathers death. My mother having Alzheimer's was in no condition to deal with any of the details. I didn't want her involved or even know about it.
I had talked to these credit card companies on the phone and told them there was nothing left. There were some cards in my mothers name but she hadn't used one in years. My father also had gotten some in my name so I could buy for him. I didn't want to sign his name. I didn't apply for the card he just called the credit card company and added me to his account with a card in my name.
I guess you know they started calling me everyday. One card wouldn't have been to bad but something like 8 cards.
They were saying they still intended to collect because both you and your mother benefited from the use of the cards and they had our social security numbers.
My reply was my father had access to those numbers and he gave them to you. Neither my mother or myself entered into an agreement with you and never signed anything. If you want to prove we have Please produce the account signature card that we signed. No response but the calls kept coming.
What finally stopped the calls was I sent these companies a letter. To the customer service address I found on the bills. I wrote "This is to inform you that one of your cardholders has died and his estate is insolvent. I followed that with my fathers name and address and then listed that account numbers for the cards." I then added "(My fathers name)s' death occurred on Month Day, Year in xxxxxx County at xxxxx xxxxxxxx Hospital in Town, State. If any additional information is required it shall be only by written inquiry.
The phone calls stopped but not the letters. However, as it approached tax filling time one of the major card companies sent notification they where not going to pursue any longer and claiming it a loss. The rest did nothing more legally either. All sent the tax forms I needed to complete my fathers last tax filing.
Also during this time some of the companies tried to make a deal with me. They said they would accept a reduced amount. If I would give them some money during the call. Preferably the whole amount. I told them that I was having trouble deciding and had to see the offer written out. If they could send me by mail a copy of the offer that I could review and better understand I would consider it. They said that was find and I would have it in a few days. I never got one of those reduction offers on paper by mail. I don't believe they intended to honor the offer. Just take the money and come after the remaining balance.
I didn't make any payments because I didn't intend to pay. I was always nice when I talked to them. I never accepted an offer or said I was going to make an effort to pay. My father died in January 2005 so I had to deal with this for the whole rest of the year until these companies have to send out tax filing info. This was 5 years ago and in Pennsylvania.
Noting the community state designation and implication, where liability does NOT benefit both, I would suggest pulling credit reports on both father and mother and see what liability is listed under which parent. I've been through this as well where father with dementia opened (or tried to open) credit lines with reckless abandon and without the knowledge of my mother. In the end, I addressed the ones in my mother's name, placed credit freezes on her (preventing more fraud) and let my father's credit card debt melt away on its own. Each credit card company will forward their past due frozen accounts to a collections agency that will do whatever it can to gain payment (even half) as they are paid a substantial portion of whatever they can collect on behalf of the credit card company. Don't bother contacting them as they will just badger YOU! While this is a morally conflicting situation, know that credit card companies have little justification to authorize additional credit lines in the presence of mounting debt as reported to credit reporting agencies "“ this is the risk of business to them. The uncollectible will eventually be written off as bad debt with notifications made to the credit reporting agencies accordingly.
Even in Community Property States, it depends on the credit card or finance company. When my husband passed away unexpectedly 8/31/09, he had many cards as individual accounts. Only 4 of them had balances. The total debt was staggering on the 4 - total of $18,000. The card with $10,000 was with our credit union. The decided that it was an individual debt, and once they depleted his individual account (only $300 in it), they cancelled the debt. Another, which only had $400 on it which had been charged about 3 weeks before his death, asked for half, then cancelled the debt. One card with $4,000 on it had insurance, never heard from them after I faxed the death certificate. The last one is still hounding me for the $600 on the balance. I am ignoring them. The only sad part is that since he had his stroke in August 2006, I had paid off about 35,000 in debt, which I am still working off.
For the companies that call, be firm - no money in estate - if that is the truth.
Best wishes with this.
Liability is different in each state, please consult an attorney licensed to practice in your state PRIOR to making ANY payment as such payment may increase your liability for the rest of the debt. If you don't have money for an attorney, consult a local/state law school as they probably have a clinic in which you can receive free or reduced legal services.
Regardless, under the federal Fair Debt Collection Practices Act, debt collectors are PROHIBITED from harassing you. The Federal Trade Commission (FTC) provides a quick handbook to your rights: HTML - http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm OR PDF - http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.pdf.
The most relevant portion describes how to address debt collectors and to whom you should report their behavior when in violation of the law, an except is below:
Where do I report a debt collector for an alleged violation? Report any problems you have with a debt collector to your state Attorney General's office (www.naag.org) and the Federal Trade Commission (www.ftc.gov). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General's office can help.