who is responsible?

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Permalink Reply by jacquesk on May 27, 2009 at 13:11

Hi Nikki
I have no background as a lawyer, solicitor or whatever but I believe that if you have a surviving spouse the credit card company can pursue them. Failing this the CCC can pursue your estate. No idea if this includes your superannuation etc.

http://www.debtconsolidationplus.com.au/debt-consolidation/who-is-r...

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Permalink Reply by Bandwidth on May 27, 2009 at 17:07

Hello Nikki


If you look up credit responsibility after death in google there are a lot of articles

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Permalink Reply by ankan on June 13, 2009 at 20:15

I think it gets written off.. If your children arent additional cardholders then they cant be held liable for debt.

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Permalink Reply by JeffK on June 16, 2009 at 13:56

I can't see that the banks/lenders are going to let any debt slip by - they'll definitely make a claim on the estate, and then work their way through family members to recover their money. I figure they'd work their way straight down to children first.

While I don't mean to come across as a bank lover, chasing the debt does make sense - the money was theirs in the first place and is owed to them.

Which is why we all need to make sure that our affairs are in order - so as to prevent others from having to clean up our mess when we're gone.

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Permalink Reply by nikki on June 16, 2009 at 22:46

I was asked this question by an elderly client on an aged pension where I work. He is in a rental house, has no assets and the bank sent him free credit increases. You know " sign here for a credit limit increase" etc. So he did and now has a large debt.He pays the minimum payment each month.
He was concerned that when he dies, his kids would be liable. I can't see how they can be responsible for his debts.
I thought credit cards had payment insurance on them. Do they ?
If he has no estate to claim against how could they chase his family for a debt they did not guarantee? This question got me thinking and I would like to give him some peace of mind, the poor fella.

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Permalink Reply by JeffK on June 17, 2009 at 18:16

OK, so I may have been wrong - not for the first time ;)

After reading the link jacquesk supplied and talking to a financial planner I'm ready to admit that I was wrong. It appears that if there's no estate then the lender can't chase rellies.

Spouse or estate
If the spouse is still alive, he or she is still on the hook; otherwise, the estate must pay off the creditors.

"The credit card company will first try to collect from the estate (assets will be sold to pay the bills). Then, if the account was a joint account, any survivors will be left holding the bag. If the debt belonged solely to the deceased, then the credit card company will end up eating the debt if there aren’t enough assets to cover it.

Credit counselor agrees:
I can confirm that the answer above is correct. I am a certified credit counselor and it is true that the credit card companies will try to collect from the estate first and if there is a co-signer, they will be responsible for the debt. However, if there is no estate to collect from the credit cards can not pursue collections from the family. They may try to get the family to pay the debt, but can not legally force them to. Simply mail a copy of the death certificate to the credit card company (certified mail) and they should take care of the rest."

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Permalink Reply by nikki on June 17, 2009 at 20:52

Thanks a bunch for that, I will pass it on to my elderly client. He has been very worried about it.
I love this forum :)

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Permalink Reply by Maria on August 24, 2009 at 12:17

Hi Jeff

Pls help me. I have 4 credit card debt 15,000 + 30,000 personal loan and my husband has credit card 16,000 + 25,000 personal loan + 18,000 car loan. I have kids and need to take care of rent and child care exp.

I am too stressed and wants to know if I leave my job and cant pay my debt I will be defaulted and get court judgemnet but If I still cant pay the wat next ?

Pls advise, I will really appreciate ur help.

Maria

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Permalink Reply by jacquesk on August 26, 2009 at 12:27

Yow-ouch. That is a very deep hole that will take some effort to get out of. Here are some possible strategies you could use.

1/ Move the debt from the credit cards where you pay ruinous interest rates to some sort of combined loan where the interest rate is less. I would then take to the credit cards with a pair of scissors so as to remove further temptation and debt.

2/Explore the option of moving the personal loans to paying interest only. I am not sure if this can be done as I have not had a personal loan in decades. This will allow you to concentrate on paying off one loan at a time rather than trying to pay all loans off at the same time.

3/ If this advice is not completely redundant. Look at your lifestyle and where you can make savings. Be hard.

The main bit of advice is to get professional advice. there is cheap and free access to financial advisors out there and while it may be an extra bill it will surely be worth it.

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Permalink Reply by chris foate on October 28, 2010 at 22:12

My grandmother died and my mother went shopping on her credit cards and maxed them out. When the payments stopped and the credit card companies started rining around my mother gave them my number (yep - she's a charmer) and she promptly moved back to the USA.

The short of it is - they did try to get some money from me, but I only had to tell them firmly that it wasn't my debt and that my grandmother was dead and the date that she died and they went away.

I guess they give it a go and hope they will get some people that are scared and will pay some money, but they don't try very hard and I don't think they have a leg to stand on.

My grandmother had a $30,000 estate from her retirement home which went to my mother so there was some money for them to chase, but they never did.

In the scheme of things - most people wouldn't owe enough for the banks to care about. They make billions of dollars in profits and hiring an extra staff member and paying them $80,000 a year plus super and insurance, etc to chase down relatives of people that own $3000 or $90,000 just doesn't make good business sense. The money that you're talking about to a bank is really chicken feed.

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Permalink Reply by Geoff on January 22, 2011 at 10:50

Hi Chris

essentially you are right but the sad news is that your mother is typical of the kind of person who has no morals about debt and who will pay.

It is the ordinary good type of person who does pay their debt right or wrong. The interest rate is factored to accomodate those who defraud or unwittingly die ie your grandmother.

Third party involvement is complex and therefore you should never go as a guarantor to another person unless you are willing to pay out as necessary without complaint. It is the same as lending - it may be repaid but if not.......

I hope this makes you feel better about who pays.

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