CNN Money recently did an interesting story about how credit cards and banks pursue grieving family to settle debts held by the deceased. This is yet another part of funeral planning that folks don’t usually consider.
What kind of balances are you carrying on your credit cards? Is it something the executor can easily pay off for you in the weeks following your demise? What about loans from banks? How long will it take before the life insurance, if you have it, will pay off?
Don’t wait to find out you’re leaving your heirs in a heap of financial trouble – especially when they are already hurting emotionally. Here’s the story:
NEW YORK (CNNMoney) — Nobody wants to remember a deceased family member by the debt they left behind, but many creditors certainly make it difficult to forget.
Denise Townley was appalled when she received a letter from her mother’s credit card issuer less than two weeks after her mother passed away.
“We have recently learned that [your mother], a valued Discover Card customer, has passed away. Please accept our sincere apologies,” stated the letter from Discover, which Townley sent to CNNMoney.
It then offered her or another family member the “opportunity” to assume the balance on her mother’s credit card and offered a special introductory APR of 0% for the first six months (the APR would increase to 13.24% after that). If Townley wasn’t interested in taking over the account, then the bank wished to discuss how the estate planned to pay off her mother’s credit card balance.
Confused and concerned that she was on the hook for her mother’s debt, Townley called Discover. When she asked a probate specialist there how they knew her mother had passed away, she was told that Social Security furnished the information.
“I find this not only ethically abhorrent, but also irresponsible and insensitive on both parties’ parts,” said Townley.
But while it may be “ethically abhorrent,” it’s not illegal. Banks are within their rights to seek payment for debts owed by a deceased borrower, and the estate is liable for the debt if it has enough money.
“We understand that settling the affairs of loved ones is difficult,” a Discover spokesman said. When contacting family members about the unpaid debts of deceased card members, Discover states upfront that payments on behalf of a deceased relative are voluntary, not required, he added.
Read the rest of the CNN story… It covers many financial things you need to know NOW!