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ElderLaw News

ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President.

After Death - Who Pays the Credit Card Bills?

After the death of a loved one, no one wants to be thinking of such everyday realities as paying the deceased person's credit cards, but it is something you may have to deal with.

Typically, after someone dies, the estate pays any outstanding bills. If there is a shortage of funds, the creditors sometimes are left holding the bag, but it could be you in certain instances.

The first case in which you may be responsible is if you are a joint cardholder with the deceased. This frequently happens with spouses or with young adults who may need an older person to co-sign in order to get their first credit card. If you are an authorized user only, you're not liable for the debt, but if you co-signed as a joint cardholder, you are. (August 20, 2012, "After Death, Who Inherits Credit Card Debt?" Bankrate.com)

The second case in which you may be liable is in a divorce. Divorce is sometimes such a complicated affair that this can be frequently overlooked. The separation agreement may specify that the ex-spouse is responsible for the credit card balance, but if they don't do it, or if the ex-spouse dies before the debt is discharged, you could be responsible. Additionally, community property states such as Texas have further complications. Community property can be used in debt settlement. An exception to this would be if the spouse held property apart from the community property. Separate property could not be touched for the debt settlement. In community property states, laws vary widely, so it is best to consult an attorney for advice. (See Bankrate.com article above.)

One piece of advice can't be given too strongly-- don't use a credit card after someone's death. This advice is especially the case if you are in doubt about the estate's ability to discharge the debt. Then, you could be committing fraud if you knowingly encumbered debt which you knew could not be paid.

Finally, realize that if you are a beneficiary of an estate, all debts will have to be paid before a final distribution of the estate can be made. This can be a lengthy process, so don't expect to be able to resolve the situation quickly. Furthermore, credit card debt is considered unsecured debt, and it will be paid after secured obligations such as mortgages are met. You may not be liable at all for the credit card debt. Always consult an attorney before paying any debts connected with an estate. (See Bankrate.com above.)

The Estate Planning & Elder Law Firm is well-prepared to help you through this process.


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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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