Second City Advisers Discusses What Happens to Credit Card Debt After Death
Credit card debt is a tricky thing to understand. Many people are oftentimes confused when it comes to figuring out what happens to credit card debt after someone dies. The general assumption is that the credit card debt goes away if the person dies. However, it is much more complicated than that. Different credit card companies have different policies. This means that there are different approaches to handling debt after someone has died. Fortunately, Second City Advisors is here to shed some light on what happens to your credit after you die in 3 likely scenarios.
Your Debt is Passed Down
One of the most common things that happen to people after they die is that their credit is simply passed on to their living spouse or other family members. However, the estate will usually handle the debt that is left behind depending on how much money is saved or what assets are available. Unfortunately, these assets are oftentimes not enough to cover the final expenses of debt. This means that the remaining family members will have to come together to determine the best course of action to pay down the existing debt.
The Debt is Relinquished
While this isn’t very common, it is still a likely scenario to occur. Creditors might just be out of luck depending on the policies that they have instilled on your loved one’s account. This means that there is a possibility that you will not have to end up owing the creditor anything after your loved one has passed away. It is important to read the fine print to determine what will happen if the individual who owns the account passes away. This will help you determine the best course of action in the event of an untimely death.
Do Not Use The Card After The Owner Has Died
There may be some kind of temptation to use the credit card after the family member who owned it dies. Unfortunately, this will get flagged as criminal activity and will more than likely provoke an investigation into the matter. Be sure to resist using that card to avoid causing any trouble with the creditor.
Beneficiaries May Lose
It is important for beneficiaries to remember that they may not receive compensation if the estate cannot pay off the debts. This is due to the fact that the remainder of the estate must be used to pay the balance that is owed. This may end up preventing beneficiaries from receiving any kind of finances from their loved one’s will. Be sure to discuss this with your loved one to figure out the best-case scenario in case the worse happens.
Preparing for The Future
Many people do not like to talk about beneficiary paperwork, what will happen if a family member dies, and other morbid subjects. However, it is important to remember that death happens all the time. This is why it is crucial that you speak with your loved ones about any unpaid debts that need to be covered. Second City Advisors recommends spending some time together as a family to hash out a plan and prepare for your future
