The death of a spouse is an exceptional emotional burden. It can also be a financial one. While many things go away upon their loss, debt is not one of them. In a community property state such as California, husbands and wives are responsible for their spouse’s debt, even after they die. A Los Angeles debt attorney can help assess your situation and determine your best options for managing your finances.
It does not matter if a deceased husband or wife’s name is on the bill. If one spouse owes money, the other can be sued by a creditor if they don’t pay. However, if a spouse has separate debt accrued before the marriage, the surviving spouse is not responsible for paying it. An executor, or someone responsible for managing property and outstanding bills, must determine how much property the deceased had and the debt they owed upon death.
Credit Card Debt
For any joint account, the surviving spouse must continue to make payments. Their two options include closing the account and paying off the balance, or requesting it be changed to an individual account in their name. Switching to an individual account may allow the issuer to re-price the card, although credit limits and annual percentage rates may change.
However, the first step should be to contact the major reporting bureaus; Experian, Equifax, and TransUnion. This should be done as a written notification of your spouse’s death. Identify yourself as the surviving spouse. Include your name and contact information, email address, and your spouse’s name, along with the Social Security number, recent address, and their dates of birth and death. A copy of their death certificate should be included.
Your goal here is to prevent identify theft, protect your deceased spouse’s credit file, and your own finances. Cancel their credit card by phone or in writing. If you both had a joint credit card account, you’ll be required to continue making regular payments on outstanding balances.
However, you won’t be responsible for paying balances on a separate individual account, even if you were an authorized user. That is unless there’s an outstanding balance and you plan on applying for a new card from the same card issuer.
Debt Repayment Options
You can repay secured debt through the decedent’s estate. This requires selling their property, such as a house, car, or other valuable items. A cosigner on a loan is also required to make payments, while the remaining account holder on a charge account is expected to do the same. Here are some other options you have when repaying your deceased spouse’s debt:
- Debt consolidation: If there are small outstanding loans, you can pay them off with a larger one, often at a lower interest rate. One monthly payment is made instead of several.
- Debt settlement: You pay off unsecured debt by settling with your creditor on a lower, mutually agreed-upon sum, which is often considered quite risky.
- Bankruptcy: There are various bankruptcy options depending on your financial situation and structure of your estate. Your attorney might discuss alternatives to avoid bankruptcy. If a bankruptcy filing is determined to be the best option, your attorney will help with discharging debt or creating a repayment plan that works for you.
OakTree Law provides bankruptcy and debt services. We also help each client weigh the best options and make the most appropriate decisions to improve their financial future. Contact our Los Angeles and Orange County debt attorney today for more information and a free evaluation.