A reader, Susan, told us about a sad and serious problem: her husband is dying and they wonder if the way they use their credit cards can prevent him from having to pay his unpaid debts after his death. Here is what she wrote to us:
My husband has terminal cancer and we are looking at finances. He has a few credit cards that are only in his name, I’m just a cardholder on some of them. When he dies, I understand that I am not responsible for the debt. I realize that the [creditors] will try to collect from me. What is the best solution to protect my good credit when all this happens but not pay his unpaid debts?
We asked bankruptcy attorneys on both coasts how they would advise Susan.
Northern California bankruptcy attorney Cathy Moran, who blogs at Bankruptcy In Brief, said Susan’s first decision should be to check her free annual credit reports at AnnualCreditReport.com to see if card issuers are reporting accounts. where she is Authorized user (and not primary). “You’re good if they don’t,” she said in an email. “If they report the account, you have to ask yourself if you’re really just an authorized user, and if so, dispute the report.”
Connecticut bankruptcy attorney Gene Melchionne said state laws vary to determine what portion of a deceased person’s bills becomes the responsibility of a surviving spouse.
Both expressed concern about using any card with the idea that the debt would not be repaid. Moran said Susan might consider ending her authorized user status or limiting her use of these cards. “As a bankruptcy attorney, I’m concerned that continuing to use them, knowing that you have no intention of repaying them, could be construed as fraud.”
Melchionne shared the same concern.
âIn bankruptcy, it is fraudulent to use a credit card knowing that the debt cannot be paid when payments are due,â Melchionne said in an email, but added that this was perhaps not the general law with Susan. State. “Even if it’s not fraud, there may be other reasons why she might be required to pay the bill,” he added.
Some state laws make spouses responsible for each other’s “necessities,” he said. âIf there is a state law that makes spouses responsible for the necessities of the other (which may include medical care), the spouse may be held liable. Connecticut has such a law, so even if the spouse was not legally liable for the debt by contract, she may be liable for the debt by operation of law.” Also, it is possible that Susan’s husband’s assets could serve to settle his debts before they could be inherited (so that his unpaid bills can be paid even if Susan does not pay them).
But what if creditors try to sue Susan? “As a simple authorized user, you will need to be clear and firm in resisting efforts to make you pay the debt, and ensure that your spouse’s debts are not flagged on your report by checking it regularly,” said Moran said. (Susan can also check her own credit health with Credit.com’s free credit report summarywhich includes two free credit scores each month.)
Finally, to avoid doing something that could be expensive later, Melchionne advises consulting a lawyer. “This is a case where the reader really needs to consult a good lawyer and get proper advice before taking another step in any direction,” he said.
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