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Credit Card Debt

Wouldn't credit card debt have to be covered by the estate before any distribution? It doesn't just go away with the death of the card holder?
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igloo572

Give a Hug

Jan 12, 2011

I was executrix for an aunt who died @ 88 w/12K in CC debt.

Who gives an 80+ yr old credit cards?????

It seems that this all depends on how you view debt responsibility. CC is unsecured debt. There's probably 2
situations: owed $$ for a long time; or was paying till death.

If the CC debt was a problem before the death, there would need to be a judgement rendered while the person was alive in order be collected from the estate. And they would need to go to the probate court with a valid judgement to be placed in line for claims within a set period of time (ours was 30 days) .

For most elderly, judgements are unenforceable as there is no salary to attach. Bank accounts that get only SS or other federally protected income cannot be attached - Section 207 of the Social Security Act - either.

In some states, Texas & Florida, you cannot place a lien on a person's home from CC related judgement. Homes there are judgement proof - which is why some wealthy have a
$$$$ residence in those states as it can't be touched. In other states, it's probably different. My aunt was in Texas so there
could never be a CC lein on her house. She was judgement proof which is true for lots of elderly.

Unless you are a co-signer from the initial CC application your parent did, you are NOT responsible for any debt. If you are getting collections calls, a nightmare as they are relentless, do not agree to anything they say. FairDebtCollection.com is a great site for this issue.

Now if the situation is she was making payments and now has
died and payments are not being made, then it's somewhat different. Shouldn't be paying anything till in probate.

Whomever is the executor of the estate is responsible for
handling proceeds of the estate through probate court. We also had a probate attorney. (DPOA doesn't factor in here once the person has died). Executor or attorney needs to file a notice in the paper in the city they resided which gives creditors a set period to request payment from estate. The secured debtors (mortage holders, IRS levies) get paid first. Medicaid (DHS or DHHS) can place a lien on estate proceeds under "estate recovery", so they are secured also. You really do not have a choice but to pay these as you can't get clear title to sell property without. These get paid off the top by executor and filed with probate court administrator. So no funny stuff.

After that, executor usually divides the proceeds according to the will. For us, 3 years to finalize & distribute. CC got zero.

Whoever is the executor gets this problem. If CC doesn't show at the hearing then they can't get anything ever. If they do show, they just get added to the list of unsecured creditors.

 
 

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