USA   |   UK   |   Australia   |   Canada
ADVERTISEMENT

Can collectors come after your inheritance?

By Todd Ossenfort

The Credit Guy
'The Credit Guy,' columnist Todd Ossenfort
The Credit Guy, Todd Ossenfort, is a credit expert and answers readers' questions about credit, counseling and debt issues.

Ask a question

'The Credit Guy' archives

Question for the CreditCards.com expert

Dear Credit Guy,
My brother, sister and I recently were left half of an estate. My aunt received the other half. Out of nowhere, old credit card debts from six years ago are claiming to have a right to take my inheritance. Can credit card companies take any of my money without my authorization or without talking to me? Also, do my brother and sister and I have to sell the property if we don't want to? Thank you. -- Pete

Answer for the CreditCards.com expert

Dear Pete,
It isn't clear from your question if the credit card debt mentioned is yours, but for purposes of my answer, I'm going to assume it is. The short answer is no, your creditors cannot take money from you or force you to sell your property. However, your creditors can sue in court to collect the debt and if they win the case, the court can grant a judgment for the amount owed. With a judgment, the creditor can petition the court for wage garnishment or bank account levy orders or to place a lien on real property owned by you. However, to legally collect the debt, the statute of limitations (SOL) in the state where you reside must not have expired. To determine the statute for your state, read the CreditCards.com article "State statutes of limitation for credit card debt." The good news is that only a few states -- Montana, Wyoming, Iowa, West Virginia and Rhode Island -- have statutes longer than six years for  credit card debt.

After six years, it is much more likely that collection companies rather than your original credit card issuers are seeking to collect what you owe. Collection companies often attempt to locate persons whose debt they own by researching public records. The awarding of the estate to you, your siblings and your aunt would have been probated in a court and, therefore, the proceedings are public record. That could be the reason why "out of nowhere" you were contacted about the unpaid accounts. Keep in mind that although the debts may be past the statute of limitations, some collectors will attempt to sue anyway, and you must be present (or submit information to the court) to use the SOL as your defense.

So, unless the collector has already received a judgment, your inheritance should be safe. I recommend that you get free annual copies of your credit reports from the major credit bureaus at AnnualCreditReport.com and review what is going on with these credit card accounts. If a judgment has been issued for any of them, it will be listed in the public records section of the credit report. 

Depending on when the original accounts went delinquent (typically 180 days without payment), the credit card accounts and the collection accounts associated with them may be about to rotate off your credit report. Credit bureausare supposed to remove them seven years from the date of first delinquency. But don't forget, even though you may be spared the pain of all that negative history on your credit, I would not bet on the collectors following suit. You may be harassed concerning these debts for many years to come. You do have rights under the Fair Debt Collection Practices Act to stop the harassment, however.

You might consider using some of your inheritance to pay what is owed. You could negotiate a settlement for each of the accounts. If you choose to do that, just know that you will restart the statute of limitations clock on that debt. Make sure you have the deal in writing before you pay and keep proof of payment just in case the debts come back to life in the future. That way, you will not have to worry about being hassled by collectors, and you will have paid at least an agreed portion of what is owed.

Take care of your credit!

See related: State statutes of limitation for credit card debt, How wage garnishment works -- and how to avoid it, Know your rights: Fair Debt Collection Practices Act

Todd Ossenfort is the chief operating officer for Pioneer Credit Counseling in Rapid City, S.D. Pioneer Credit Counseling has been a member of the Association of Independent Consumer Credit Counseling Agencies since 1997.

The Credit Guy answers a question about a debt or credit issue from a CreditCards.com reader each week. Send your question to The Credit Guy.

Published: March 7, 2011



Join the discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Three most recent The Credit Guy stories:

Share This Story




Follow Us!


Credit Card Rate Report

Updated: 12-20-2014

National Average 14.92%
Low Interest 10.37%
Balance Transfer 12.73%
Business 12.85%
Student 13.14%
Reward 14.90%
Cash Back 14.94%
Airline 15.52%
Bad Credit 22.73%
Instant Approval 23.33%

ADVERTISEMENT
ADVERTISEMENT