Debt after Death: What to do when a Family Member Dies

When a loved one dies, coping with grieve is never an easy process and the last thing you want to think about is the debt he/she has left behind. While time may heal your wounds of sadness, the longer you take to attack the issue at hand the more detrimental it could be for deceased’s estate; unfortunately when a person dies their debt doesn’t rest in peace with them.

You want to start by taking stock. Going through all the deceased statements and documents and making a list of all outstanding debts. This will help you ascertain whether these debts will be paid for by the deceased funds/assets or by another party who co-signed specific debt agreements. This brings us the first step:

1.Find out who is Responsible for Debts;Family, Friends or Heirs?

To identify the party on which the deceased’s debt lies, one will first need to know if the debt was joint or individual. A joint debt is where two or more people are responsible for the full debt.  In this case all names will be on the credit agreement or mortgage. It most circumstances it is very common for the survivor of joint debtors to be responsible for repaying any outstanding debt, but the terms of the agreement should be checked to confirm that this is the case. For example, if a wife and husband took out a joint loan and the wife dies. If the terms and agreement indicates that the other party be held liable in death and other circumstances, then the wife will be responsible for repaying the outstanding balance.

On the other hand, individual debt is debt that’s clearly owed and has been taken out in the name of one person. If the deceased has debts in their name only, you should contact the lender to notify them of the death.  You should also ask the lenders whether any of the loan or credit card debts are covered by payment protection insurance and whether this includes life coverage. If yes, make a claim.

2. Stop Using Credit Card Accounts

Authorized users on the deceased credit card accounts should discontinue use immediately after the cardholder dies or they could be liable to fraud charges.If you are an authorized user on a credit card account, do not continue to use the card after the main cardholder dies. A co-signer, guarantees the debt of the borrower.  Which means if the borrower dies, the co-signer becomes liable. However, Authorized signers on credit card accounts, aren’t liable. They didn’t originally apply for the credit; they were only allowed to “sponge” on the account of the person who did. Therefore if that person dies, the authorized signers are generally off the hook and because you’re not liable for the debt, this could be considered fraud.

 3.Notify Creditors and Credit Bureaus

The deceased estate is transferred to someone known as the executor or administrator, who is chosen by the will and confirmed by the court to handle all financial issues of the deceased including the debts. Once the executor is confirmed then he/she can start the process of notifying the creditors. Additionally they should also notify the two credit bureaus operating in Jamaica, including CRIF NM, and request that the account be labelled with the following statement “Deceased: Do not Issue credit.” Taking this step will help to prevent a common but serious problem of Identity Theft.

Furthermore the executor should request a copy of the deceased’s credit report from CRIF NM, which is the best way to ascertain the exact debts that are outstanding.

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