When a loved one dies, the last thing you want to think about is the persons finances. However, its important to understand what happens to credit and debt after death.
Do Credit Card Companies Know When Someone Dies?
Losing a loved one is never easy. In the midst of grief, there are many financial and legal matters that must be handled, which can feel overwhelming. One of those tasks is notifying credit card companies of the cardholder’s passing.
You may wonder – do credit card companies automatically know when someone dies? The short answer is no. Credit card companies are not automatically informed when a cardholder passes away The account does not simply close or get flagged in their system This means the deceased person’s accounts remain open and active, which can lead to fraudulent activity if the right entities are not properly notified.
In this article, we’ll explain why you need to take action to notify credit card companies of a death, walk through the notification process step-by-step, and answer some frequently asked questions on this topic
Why You Must Notify Credit Card Companies
There are several critical reasons why you need to inform credit card companies when a cardholder dies:
- Prevent Fraud and Identity Theft
Once a person passes away, their accounts become prime targets for fraudsters and identity thieves. Hackers often scour obituaries to find potential victims. They can steal personal information and rack up fraudulent charges if accounts are left open and unused. Notifying the credit card company right away helps safeguard the account.
- Stop Recurring Charges
Many credit cards have automatic recurring payments, like subscription services, utilities bills, etc. These charges will continue after death unless you contact the company to end them. This prevents unwanted charges from accruing.
- Settle Outstanding Balances
Any balance owed on the credit card will need to be addressed. The executor of the estate or surviving co-signers will need to settle the balance. Notifying the credit card company begins this process.
- Halt Interest Charges
Once an account is closed, interest and finance charges will stop accumulating. This prevents the existing balance from growing over time.
- Close Associated Accounts
Credit card companies can close any secondary accounts associated with that card, like rewards programs, online accounts, etc. This provides additional protection.
- Update Credit Reports
Informing credit bureaus of the death ensures the credit report is updated to prevent new accounts from being opened. The card company can no longer report to the bureaus either.
Who Can Notify Credit Card Companies?
The executor named in the will or a surviving co-signer on the account have the legal right to notify credit card companies of the death. This includes:
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Spouse or domestic partner
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Adult children
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Parents
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Siblings
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Any other named executor
If you are the executor or co-signer, the credit card company will require evidence that you have the authority to close accounts on behalf of the deceased. This usually involves providing a copy of the death certificate and will paperwork.
What’s the Notification Process?
Here are the step-by-step instructions for notifying credit card companies:
- Obtain Death Certificates
Request multiple official copies of the death certificate from the funeral home or county records office. You will need to send these to financial institutions.
- Identify All Accounts
Compile a list of all the deceased’s credit cards and lenders. Review statements and account records. Also order a copy of the credit report, which will list all open accounts.
- Contact the Companies
Call each credit card company’s customer service line. Inform them that the primary account holder has died. Ask to close the account. Record the date, name of representative, and confirmation number.
- Follow Up in Writing
Draft a letter to each credit card company confirming your request to close the account. Attach a death certificate as proof. Send via certified mail and obtain tracking receipts.
- Stop Recurring Payments
Contact any businesses with automatic recurring bills on the credit card accounts. Cancel the payments and subscriptions.
- Settle Outstanding Balances
Discuss any outstanding balance with the credit card company. The estate executor will need to pay the balance according to state law.
- Review Credit Reports
Order credit reports every few months to verify accounts have been closed and no fraudulent activity has occurred. Consider placing a credit freeze as well.
Frequently Asked Questions
Here are answers to some common questions about notifying credit card companies when a cardholder dies:
How long after death do you have to notify?
Ideally, you should notify credit card companies as soon as possible after the death occurs. This greatly reduces risks of fraud or identity theft related to open accounts.
What documents do you need to provide?
The credit card company will likely require a certified copy of the death certificate as well as documentation authorizing you to manage financial matters on behalf of the deceased (e.g. letter of testamentary if you are the estate executor).
Can a spouse notify if their name isn’t on the account?
A surviving spouse has the authority to notify credit card companies even if they are not a co-signer on the account. However, the company may ask for additional estate paperwork demonstrating the spouse’s rights.
What if I’m a joint account holder?
If you are a joint account holder, inform the credit card company that the primary owner has died. Request to have their name removed from the account going forward.
Who pays any outstanding balance?
Responsibility for an outstanding balance depends on state law. Typically, the estate assets are used to pay any remaining credit card debt. The executor facilitates this payment.
Does the probate process affect this?
You can begin notifying credit card companies right away even if probate proceedings have not been finalized. However, some companies may wait for probate to close accounts or address any debts.
The Takeaway
Credit card companies are not automatically notified when an account holder dies. To prevent financial risks, the appropriate next of kin or executor should contact all companies immediately after the death occurs. Taking quick action helps protect accounts from fraud, resolve balances, and ease the burden on grieving loved ones. With the proper notification, credit card companies can honor the loss of their customer by safely closing accounts and preventing unwanted charges.
Debt After Death: What You Need to Know
When a person dies with debt, their estate becomes responsible for paying it back. However, if there isnt enough money in the estate, then generally no one else is obligated to pay.
There are a few exceptions. You may be responsible for the deceaseds debts if:
- You co-signed a credit card account with the deceased person. A co-signed account means the debt is also in your name.
- You had a joint credit card account with the person. A joint account may mean you will be responsible for repaying the debt. However, according to the Consumer Financial Protection Bureau, if you were simply an “authorized user,” you will not usually have to repay the outstanding debt.
- Your spouse has died and you live in a community property state. These include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska and Oklahoma are also considered community property states, but only if you and your spouse signed a special agreement. In these states, you may be obligated to pay your deceased spouses debt using property you shared.
- State law requires you to pay a particular debt owed by your deceased spouse. In some states, you may be responsible for paying back specific types of debt. This could include health care expenses or debts in connection with a house that you jointly owned.
Visit your state governments website to learn more about requirements where you live.
What to Do About Debt Collectors after Death
Debt collectors may contact the deceaseds spouse, executor or administrator to discuss any debts left behind. What action can you take?
- You can block debt collectors from contacting you. If you are the executor of an estate, you can send a letter asking the debt collector to stop contacting you. The collector cant contact you again except to confirm that they received your letter or to inform you that the creditor plans to take action regarding the debt.
- However, this wont eliminate any debts owed. Even if you block contact from a collector, the estate may still be responsible for the debt.
How Do Credit Card Companies Know When Someone Dies? – CreditGuide360.com
FAQ
Do credit card companies find out when someone dies?
Credit card companies don’t automatically know when a cardholder passes away, so it’s the responsibility of family members or estate executors to notify them.Nov 2, 2024
Do credit agencies know when a person dies?
There are a few different ways the credit bureaus may be notified of your death. By lenders: When you pass away, your spouse or the executor of your estate should alert your creditors of your death. The next time the creditor updates your accounts with the credit bureaus, they will also report that you are deceased.Sep 9, 2024
Do you have to notify credit cards of death?
Financial institutions and other organizations to notify of a death. Report the person’s death to banks, credit card companies, credit bureaus, and other financial organizations. And contact utilities and places where the person had memberships and subscriptions.
How do creditors know when someone dies?
Settling claims from creditors: The executor must give notice of the person’s death, usually by publishing in a newspaper or sending letters directly to creditors. Timeframes vary by state, but creditors generally have three to six months to make claims to be paid.