Is a widow responsible for late husband's debt?
A spouse's liability depends on several factors, including where he or she lives
Credit Score Report
Dear Credit Score Report,
husband passed away in 2006. He had no life insurance, and he left me with a
mortgage, which I have managed -- with three jobs -- to keep up. The problem is that he
had a credit card that I am an authorized user on. Now it's on my record as a charge-off.
What can I do? Am I responsible? I have worked hard to manage my credit. I live
in Minnesota. -- Deborah
As an authorized user living in a state with no community
property laws, you shouldn't suffer either the financial or credit reporting
impact of your late husband's unpaid credit card debt.
While you're certainly facing a tough financial challenge, your
situation isn't unusual, experts say. That's because banks may decide to target
anyone associated with an unpaid account with the hope of recovering their money.
In this case, you're in the crosshairs. But unlike some other families dealing
with unpaid debt in the wake of a relative's passing, you have two major
factors working in your favor:
- Minnesota isn't among the 10 so-called
"community property" states that place responsibility on both
partners for debt accumulated by either spouse during a marriage. (Those states include: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In Alaska, you can opt in to community property status, but it's not mandatory like it is in the other nine states.) "Minnesota
is not a community property state, so when the sole responsible party dies,
usually, the debt is written off in a death claim, especially if there is no
estate," says Linda Humburg, a manager with FamilyMeans Consumer Credit
Counseling Service in Stillwater, Minn. If there is an estate, however, it may
be responsible for repayment.
- Unlike joint account holders or
co-signers, authorized credit card users "have charging privileges but no
legal obligation to pay the debt," says Gail Cunningham, vice president of
public relations with the National Foundation for Credit Counseling (NFCC)."
It's now up to you to make sure your credit reports accurately reflect that
How do you do that? To start with, double-check that you are
listed as an authorized user, rather than a co-signer, on the account. Humburg
recommends asking the bank for a copy of your husband's credit card application
or approval notice. Those documents should confirm that you aren't listed as a
responsible party or guarantor. If the bank denies your request, that may not
be a bad thing. "If she isn't authorized to get information or discuss the
account information, and they say something like, 'We can only act on that per
the request of your husband,' then she would know that she is not responsible
for repayment of the debt," Humburg says. That knowledge will make it
easier to get the charge-off notation removed from your credit report.
Once you've confirmed your authorized cardholder status, dispute
that charged-off account with the bank and the credit bureaus that list it on
your reports. (You can find information about filing disputes at the websites
for credit bureaus Experian, Equifax
Via certified mail, send letters that explain your situation and include
supporting documentation. Along with each bureau's specific dispute form and the
card agreement -- if it's made available to you -- Humburg recommends sending a
copy of the certified death certificate for your late husband. The letter
should include a request that the item listed on your credit report "be
removed and that the debt be updated as a 'death claim,'" Humburg says. You
can also submit a 100-word statement to each bureau explaining your predicament
for any potential lenders.
But what if the bank and bureaus don't update that item? Then
you'll want to bring out the big guns, starting with a Federal Trade Commission complaint
filing. If the FTC can't resolve your problem, the next step up the ladder
would be attempting to sue in small claims court, says Sandy Shore, a Freehold,
N.J.-based counseling supervisor with nonprofit credit counseling agency
Novadebt. After that, "if they are claiming she is still liable, she may
need a lawyer," Shore says. Other
consumer experts agree. "If these listings would persist or reappear, or
the bureaus refuse to remove them and this action causes her harm, I would
suggest she discuss the situation with a consumer law attorney in the
area," says CCCS's Humburg. "They may be able to break through the
'communication wall' more easily and would know all of the legal points required
to get the record corrected," she says.
A lawyer will give more specific advice, but you can be
confident in the decision not to repay the bank. Often, there are "situations
where the survivors are not well informed and simply capitulate and pay because
they don't know their legal rights and make the assumption that they have to do
this," says CCCS's Humburg. "You
can't blame the collector for trying to recapture the lost funds, but they do
eventually have to follow the law and accurately present the situation, whether
to the surviving consumers or on the credit report," she says.
See related: Compare states' community property laws, Credit card authorized users, joint account holders differ, How to dispute credit report errors, How to add a written statement to your credit report
Jeremy M. Simon is a former CreditCards.com reporter who wrote about credit scoring, economic data, credit card crime and other issues. He is based in Austin, Texas. He is a graduate of Vassar College and has previously worked for Thomson Financial in New York City, where he wrote about the stock markets, and Texas Monthly, as well as several publications in Austin.
Published: November 30, 2010