Coping with the death of a loved one is difficult enough without the added pressure of creditors calling you to collect on the deceased person’s credit card debt. But can a bank collect a credit card debt owed by your deceased parent or spouse?
By and large, we talk about probate as an unfortunate process. True, probate can put some undo stress on an already stressful family situation, even when there is no disagreement regarding how assets of the decedent are to be distributed. That said, probate can be utterly necessary and even useful when there are debts in the estate picture.
For example, when a creditor makes calls to the decedent’s relatives, it is a simple matter to refer them to the personal representative of the decedent. This will provide a platform for the sorting out of debts that are legitimate and those debts that are erroneous or simply incorrect. The personal representative is granted time by the statute to do the sorting, thus relieving the pressure imposed by the collection agent.
So, how do you handle debts after death? It is a practical question, after all. Few of us leave this life without something lingering in our accounts payable. Unfortunately, too many families do not know which debts live on after their loved ones are gone.
Fortunately, MoneyTalkNews took up this matter in a recent article titled “Debt After Death: 10 Things You Need to Know.”
The central bit of wisdom to take away from the article is the difference between the one who took on certain debts (the decedent) and their heirs. Problems arise, however, when they have muddied that boundary. Generally, when the debtor passes away, their debts do not transfer to their heirs or family members. The debts fall to the estate and the probate process.
As a court proceeding, officially, probate varies in some respects. Nevertheless, probate is the proper forum to deal with debts after death. This is the period when creditors can make their claims. The probate procedure in Utah allows for the publication of Notice to Creditors. The notice is published in a newspaper of general circulation for three consecutive weeks. The notice provides the name and address of the personal representative, the attorney for the personal representative and the court. If the creditor fails to present its claim within 90 days of the date of first publication of the Notice to Creditors, the creditors claim may be forever barred. As a result, everything should be done to ensure that creditors get funneled into the probate process without disturbing the family.
More specifically, creditors should be pointed to the executor. In addition, all avenues of credit and credit reporting should be informed and closed off. Of course, there are certain types of assets when heirs really are on the hook, especially when it comes to assets for which the heirs have co-signed.
Take a look at the 10 tips in the original article and be sure to follow them, because creditors are not always honest. Some creditors are not ashamed to pester a grieving family.
Reference: MoneyTalkNews (October 7, 2013) “Debt After Death: 10 Things You Need to Know”