When a cardholder dies, a variety of factors come into play in determining how, when and if a balance and interest gets paid.
Dear Credit Guy,
I am sorry for your loss. As with most general questions like yours, the short answer is: it depends. Let’s explore a little further and, with luck, your particular situation will be included.
First, it matters if the account is solely owned by the deceased or if the account includes a joint cardholder. If the account is jointly held, then the other cardholder is responsible for the account regardless of the death, and interest will accrue as specified in the card agreement unless the balance is paid in full.
On the other hand, if the account was owned only by the deceased, then his estate is responsible for the balance owed based on estate laws for the state. Should there be no assets in the estate, then the creditor will have no other recourse to collect the debt (unless the deceased lives in a community property state, which we will discuss later). Whoever is handling the affairs should send a certified copy of the death certificate to the creditor and explain that the estate has no assets to pay the debt.
Should the estate have the money to pay the balance due or a portion of the balance due, I recommend that it be paid. The creditor would be within rights to sue the estate for the debt owed. One positive note regarding paying the balance is a little known provision in the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act). The provision states that should an estate administrator call a creditor and request a balance due on the account, the administrator may pay the stated amount within 30 days and the account will be satisfied. In other words, no interest, fees or any other charges may be added to the balance once the creditor gives the amount due to the estate administrator, provided that the full payment is received within 30 days of being given the balance due.
Now for community property state issues. (Those states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) If the deceased was married, his spouse is alive and the debt was accumulated after the marriage, then the surviving spouse could be held responsible for the account. Even if the spouse is not named on the account as a joint owner, community property laws state, in general, that debt accumulated during the marriage is the responsibility of both parties.
Boris, if you are the estate administrator and are feeling overwhelmed, you might consider seeking the advice of an estate attorney who is familiar with the estate laws in the state of residence of the deceased.
Take care of your credit!
See related: What happens to credit card debt after death?, Spouse’s passing doesn’t absolve widower of joint credit cards, Joint accounts: Till debt do you part, Credit card authorized users, joint account holders differ, Credit card law compels speedy estate settlement for debt after death, Who’s responsible for a deceased spouse’s card debt?