Paying the Debts of the Deceased

Some banks wait only days after a debtor’s death to contact family members regarding any remaining debts. While the bank’s actions may seem callous, they are not illegal. Banks have the right to collect debts owed by deceased individuals, and the decedent’s estate is liable for the debts if it contains enough money to cover them. Banks and other creditors often want to be the first in line to collect from the decedent’s estate or next of kin in case either run out of money.

Typically, family members are not liable for a deceased family member’s debts unless the debt is from a joint account or for a loan on which the living family member co-signed. Individuals in community property states, however, are typically liable for the debt of deceased spouses.

An executor of the estate can request a copy of the decedent’s credit card balance, and the issuer must provide the information within 30 days under the new CARD ACT. Additionally, the issuer cannot charge interest or penalty fees if the debts are paid within 30 days after receipt of the information.

The creditor is often out of luck if the estate does not have enough assets or money to pay the debt.

See Blake Ellis, Debt After Death: Banks Chase Down Mourners, CNN Money, Sep. 1, 2011.