How I dealt with my parents' credit card debt after their deaths

After their sudden demise, daughter forced to cope with their finances

Editor's note: Jennet Sullivan of Austin, Texas, lost both of her parents during a violent crime in March 2009. Somewhere between grieving and healing, she suddenly had to juggle credit card debt, utility bills and lawyers to settle her parents' estates. Through her personal experience, she has learned some helpful tips and tricks to navigate the aftermath of an unexpected death. She offers her story here.

Jennet Sullivan

Jennet Sullivan, who had to clear up her parents' estate after their sudden deaths.

I wanted to share my recent experience as it might be information you already know, but if not, it's stuff I wish I would have known.

What I learned is the monetary difference between settling credit cards before versus during or after probate.

I ran into problems because neither of my parents had a will. They were pack rats, so trying to figure out credit card debt was pretty tough. We were getting stuff in the mail, but a lot of their statements were going straight to them over e-mail. Who knew paperless statements could be such a hassle! So I did what I could and figured that, eventually, I'd either find the rest of the credit cards or they would just be out of luck.

Both my parents had each other listed as their beneficiaries on their 401(k)s, but my Dad had my little brother as a secondary beneficiary. That helped make things easier; he gave that money to me so that I could settle up with the credit cards and other companies. That and my mom's insurance (which finally gave us a settlement) paid for all our initial costs. I hired a lawyer because my mom had a 401(k) through her work that listed my dad as a beneficiary, and since there wasn't a will, I needed to become administrator.

My lawyer told me to make sure to settle with the credit card companies before going to probate, but I don't think he fully conveyed the mess that happens if you don't. If he had, I would have worked a little harder at finding all the credit companies. Initially, most every company was very willing to settle for about 50 percent of the balance of the card. I called them, gave them the info, faxed them the death certificates and then, a week later, called their probate department, and the account was either just closed out and considered a loss, or they settled for 50 percent. I had to make sure to get letters stating that the account was considered paid in full, and that they considered the estate absolved of any monetary requirements.

I thought I had gotten all the credit cards. I hadn't. I went to court, became administrator and then found out about a particular credit card company that shall remain nameless. They had immediately sent my information to their law firm, and I started getting certified letters and nastiness about how I had to settle, I had to do this, had to do that, etc. Upon contacting them, I found that had I been able to settle with them pre-court, I could have settled for pennies on the dollar -- probably less than 50 percent, because the credit card had a rather high amount on it.

However, because I had gone to court, the credit card company refused to settle for less than 85 percent of the balance of the card. So it cost me quite a bit more of the estate money than planned. I guess that's kind of selfish of me, but covering expenses alone for me and my five siblings is pretty expensive, and that type of stuff isn't considered a higher priority than debt. If there hadn't been enough money to pay it, I wouldn't have had to, but since there was, I needed to settle. I would have saved the estate a LOT of money had I settled before I went to court.

As I write this, I'm about to go send off a final payment to my parent's water company and call my lawyer to make sure -- one more time -- that I haven't missed any bills. Once the estate money is distributed and gone, and the estate accounts have been closed, I'll be able to relax again. Had there been a will, or a list of accounts with their information on it -- had there been any way to track where their money had been going -- I would have been far better off than muddling through their house looking for unpaid bills. My parents were always teachers, but this was not a lesson I expected to learn so thoroughly from them. My hope now is that my children will face my death armed with better tools to get them through the business side of dying.

See related: What happens to credit card debt after death, Who is responsible for a deceased spouse's debt?, Handling collection calls for a dead person's debt, Starting a credit life after a spouse's death

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Updated: 11-25-2017