What happens to elderly credit card debt at death?

Kath0362 asked...

What happens to elderly credit card debt at death? We just found out that my brother-in-law is running up my mother-in-law's credit cards. ($37,000). She is 89 and clueless. If asked, she would have approved all of his purchases. If he continues to pay the minimum due, a total of $1,200/month, at 30% interest, often with late fees added on, what will the credit card companies do when she dies?

Recently we discovered that he had her quitclaim her third of her home over to him...2/3 belongs to my husband and myself. We had planned to use the sale of her house plus her income to afford long-term care, but now his brother has ruined that. My husband hates to confront his only brother and feels his mom won't love him if he's at odds with the "favorite child." Should she declare bankruptcy? Would that affect her ability to get medical coverage?

Expert Answer

Barbara Repa, a Caring.com senior editor, is an attorney, a journalist specializing in aging issues, and the author of Your Rights in the Workplace (Nolo), now in its 10th edition.

What usually happens to a person's debt at death is that all creditors are notified -- and the outstanding debts are ranked in a hierarchy set out in state law and paid off from remaining estate property.

If there isn't enough property to satisfy the creditors at the tail end of the list, for example, they are simply out of luck and out of pocket. Highest on the list are the predictably peskiest creditors, such as those demanding payment for expenses of a funeral and last illness, lawyers' fees, and the IRS. Credit card companies are generally lower down on the ladder.

That bit of semi-hopeful information aside, however, it sounds as if your brother-in-law may be taking financial advantage of his mother -- a common and illegal form of elder abuse. While your husband understandably doesn't want to rock the family boat by shining the light on the situation, it may be the only way to bring the abusive practice to an end. First he needs to get the facts -- to make sure the suspected pilfering is a reality. He can try to handle the matter informally, by having a confidential talk during which he asks his brother to provide an itemized listing of the credit card charges. It sometimes stops the unwarranted purchases if the buyer simply knows someone is watching.

The credit card company, if alerted to the facts, may also be moved to place a limit or cut-off on the spending on the account.

And if his mother is still cogent enough to understand the facts and gravity of the situation, your husband my need to confront her with it, even if that risks stirring up a bit of a hornet's next. He would need to reassure her that he is reaching out to her with her own best interests at heart. Her consent would be needed to set up a power of attorney for finances or other legal arrangement that would protect her assets. Given the facts, declaring bankruptcy does not sound like the best option.

Finally, if all attempts to reconcile the situation fall on deaf ears, consider contacting the National Center on Elder Abuse hotline , run by the Administration on Aging. It can provide contacts for local legal help, should that become necessary.