3 Tips For Dealing With Your Dead Relative's Credit Card Debt

Are you the estate executor for a loved one who recently passed away? Did that person pass away with a significant outstanding credit card balance? When people pass away with a significant amount of debt, their relatives often worry that they'll be on the hook for paying the debt. Fortunately, that's not usually the case unless a relative co-signed on the debt. In that case, they could be held responsible. However, just because your not a co-signer doesn't mean creditors won't try to collect from you. And it also doesn't mean the debt won't impact your potential inheritance. Here are a few ways you can manage the situation and avoid paying the debt out of your pocket:

Make creditors aware of your loved one's passing. Your loved one's creditors will likely contact you and your other relatives in an attempt to collect on the credit card debt. That's especially true if you're an authorized user on the card. Even being an authorized user, though, doesn't necessarily make you responsible for the debt. To eliminate harassing calls, let all creditors know that your loved one passed away. You may even need to send or fax them a copy of the death certificate.

Also, provide them with the name of who they should be contacting. If you're working with a probate attorney, give his or her information to the creditor. Even though you and other relatives don't have to pay, the estate still has an obligation. If you're the executor, you may have to work with the creditors on these obligations until the estate clears probate.

Tally all available assets. Just because you don't have to pay the bills out of pocket, doesn't mean they don't have to be paid at all. The obligation will fall to the estate and the estate's assets may need to be used to pay the bills. As executor, it will fall on you to audit those assets, liquidate them, and then use the proceeds to pay off the debt. Look into selling any property, vehicles, and other assets to raise funds. You may also want to consider having an estate sale.

What if there aren't enough assets to sell to pay the bills? Unless there's a cosigner on the account, there's no one for the creditor to collect from beyond the estate. In many cases, unpaid credit card bills are written off.

Don't distribute proceeds until the bills are paid. There's one way that you and loved ones could be forced to pay the bills out-of-pocket. That's if you distribute assets from the account before creditors have had time to file claims. Every state is different, but most states have a designated time period in which creditors must file a claim on assets. If the do so, you as executor must look into ways to pay the bill from the estate. If creditors fail to file claims within that time, the estate may not have to pay them. However, if a creditor files a claim in the correct time period, but the funds have already been distributed, then they may be able to come after the recipients of the funds. Wait until the end of the period to pass along money to your relatives.

For more information, talk to a probate lawyer. They can manage the payment of debts so you and your family members don't have to.