If your parent or loved one is living on a fixed income and they do not have assets (i.e., a house in their name), they essentially are judgment proof. You can send a Cease and Desist letter, indicating they are only receiving social security benefits and, therefore, they are judgment proof. This can be done while your parent is still alive. You can contact any legal aid office, and they will mail you the form. Fill it out and have your parent sign it, and send it to the creditor with all the appropriate information. If they continue to harass you for payment, you can report them to the Federal Trade Commission in Washington DC. If it is a law firm harassing you, you can report them to Grievance Committee in the county the law firm is located in. My great aunt had fraud perpetrated upon her. Her home is now in pre-foreclosure and she has tens of thousands of dollars in credit card debt. I just sent out over a dozen of documents. It is best to send the document certified, return receipt requested. It costs about $6 per letter, but is is worth the extra money because you have a receipt indicating the document as received by their office. Once it is established that your loved one is judgment proof, it should make things easier after they pass on to establish they had no assets, and the debt was theirs and theirs alone.
My mother has no house, property, etc. Just Life Estate which her step-son is suing to get due to her dementia. Mom is now at Behavioral Unit at the hospital then she will be placed to a nursing home very close to my house. I have been taking care of her in my house for 2 and half years now. She has maxed out Bank of America credit card that I wonder if they come after me, but I don't own anything valuable and I am her POA. I did use her credit card to buy her meds, food and things she needed like new eye glasses and dental work before she reached the donut hole. But remember that she had 8% interest rate before all credit cards raised everyone's interest rates. Hers jumped from 8% to 14.99 causing a surge in the balance for no reason, she had had that credit card for many years with no problem. I wouldn't want to worry about BoA plus they all got bailed out money and then raised everyone's interest rates just for profits.
Everyone above is correct. Any outstanding debt (liens, credit card debt, loans, etc.) goes against any assets that are left in the estate. The estate pays debts in a certain order. If debt is incurred by any party, it is only right that it be paid back either during a person's lifetime or after they pass (although I do not agree with the sometimes agressive tactics used to collect it.)
Also note, that even if the credit card companies write off the bad debt, they can declare the balance written off as income to the decedent in the year that they write off the credit card balance. So you can end up with the estate owing tax on the income to the federal or state government. You would get a 1099-C for the bad debt write off. If it's a joint account, the bad debt could also show up on the credit report for ALL persons on the account. Just make sure to collect the paperwork when you calculate the estate's final tax return just in case, Helen
If they are unsecured credit cards issued in their name only, the Death Certificate might be sufficient. But you're never sure with those vultures. Not only do they take out insurance on every card/account, but they also try to collect from family members named in proxies & testaments after the individual has been dead and buried.
If a will is probated with the courthouse, the credit companies have the right to claim payment. I would send in a death certificate first, however, before talking to them. If you do not probate a will, a death certificate should suffice. There are nuances to each situation, however, that may indicate a need for assistance from an attorney. Each state can be different, so check with your county's courthouse.
Consumers were supposedly going to be protected by the 2009 CARD Act. The 2009 bill has provisions that are going into impact throughout this year. One provision of bill needs something simple. That credit cannot be issued unless the person getting the credit can prove that they can repay the obligation. The bill is causing some severe unintentional consequences, however. Stay-at-home spouses are very possibly going to be losing financial freedom, under the provisions of this bill.
The credit card creditors have the same claim to any assets remaining in the estate as any other creditors would have...if there are assets remaining when the decedent dies. They can file a formal claim during probate...or cause a probate administration to be opened if one has not been otherwise.
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As the new neighbor across the hall says: "You're fierce!" Great tip.
If they are unsecured credit cards issued in their name only, the Death Certificate might be sufficient. But you're never sure with those vultures. Not only do they take out insurance on every card/account, but they also try to collect from family members named in proxies & testaments after the individual has been dead and buried.
-- ED