Credit card lenders don’t find themselves in a particularly strong position when a cardholder dies. Negotiation isn’t part of the process of settling the debt because the law steps in and takes away lenders’ bargaining power. They’re left with what the statutes and sometimes a judge decide to give them. Family members and loved ones usually aren’t obligated to step in and pay the deceased’s debts.
Authority to Pay Claims
When a debtor dies, responsibility for his bills falls to his estate. Although creditors can call family members to find out who’s managing the estate and who to contact, they can’t demand payment, according to the Federal Trade Commission. The estate’s executor is responsible for marshaling the deceased’s assets and cash and using it to pay his debts. She must notify creditors of the death as part of the probate process, and they’re then responsible for making claims for the money owed to them. If they fail to do so within a period of time set by state law, they’re typically out of luck -- they won’t receive payment.
The Executor’s Decision
When creditors do make claims, the executor is in the driver’s seat, at least initially. She has the authority to pay the debt or reject it. She might decide to pay just some of it because she doesn’t feel that the entire balance is a legitimate claim. If a creditor isn’t happy with her decision, its only recourse in most states is to petition the court to ask a judge to override the executor's decision.
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.