When a cardholder passes away, an authorized user isn’t normally liable for the debt on the card, as a joint account holder could be. A spouse or legal partner may be liable for credit card debt in several states that have community property rules.
“Non-exempt assets, such as automobiles, property and jewelry, can be liquidated to pay off debt when a cardholder dies. Leslie Tayne, a financial attorney and author of Life & Debt, explains that this can vary based on assets and whether or not a will needs to be probated. “Their beneficiaries, such as a spouse or child, could be affected by this. In order for a creditor to be paid, they must file a claim in Surrogate’s Court.”
It is possible for a cardholder’s credit account to become delinquent based on the structure of the cardholder’s estate and the length of time it takes to handle their debts. Because of these missing payments, the authorized user’s credit record may be negatively impacted. The three major credit bureaus (Experian, Equifax, and TransUnion) should be regularly monitored for any changes to your credit record.
Additionally, Tayne advises that authorized cardholders should stop using their cards as soon as the cardholder has passed away. In most states, it is illegal to do so.
“As long as the cardholder’s authorized user is using the card, it might be considered fraud, she explains. “If the cardholder’s debt is not paid off, the creditor may sue the authorized user for all of it, even if the authorized user would otherwise not be liable for it.
Can an authorized user be liable for debt?
You can use someone else’s credit card in your name if you are an authorized user. Authorized users aren’t legally obligated to pay their credit card bills or accrued obligations. Still, it is the primary account holder’s job to take care of this.
Is authorized user responsible for credit card debt after death?
Debt must be paid before any assets may be handed to your heirs or surviving partner after you’ve passed away. Your estate, which is the total of your assets at the time of your death, is used to settle your debts. It is the responsibility of your executor to pay off any outstanding obligations that you may have left in your estate. If you don’t have a will or an estate plan, the executor will be selected by the probate court if you don’t have a designated executor.
Your estate is insolvent if you owe more money than you own. Family members may or may not be obligated to pay your credit card debt in this situation.
If you die with a credit card debt, your joint account holders may be held liable for the balance. The credit card issuer reviews both applicants’ credit reports when choosing whether to grant credit to a joint account holder as a cosigner or coborrower. The credit card bill must be paid in full by both account holders.
There are fewer and fewer major credit card issuers offering joint accounts. If you and your deceased spouse had a joint credit card account, it’s more likely that one of you was an authorized user. If you don’t know which group you fit into, contact the credit card company to find out.)
A credit card in your name is issued to you as an authorized user, so you can use it to make purchases and payments on the account. However, the primary account holder is ultimately liable for repaying the credit card debt.. As an authorized user on a deceased person’s account, you aren’t obligated to pay the balance owed.
If you live in a community property state, you’ll be held liable for the financial obligations of your spouse. Your spouse’s credit card bills could fall on your shoulders, even if you were an approved user or the card was wholly in your spouse’s name. Only Alaska allows spouses to choose whether or not their property is to be considered communal property in the seven other states where this option is available. You should consult an estate law professional in your state if you live in a community property state to find out what your responsibilities are.
Can an authorized user be forced to make payments?
An authorized user is someone to whom a cardholder has granted access to use their account for the purpose of making purchases with their credit. In addition, approved users are permitted to make charges on the card and may be eligible for a new card of their own. In contrast, an authorized user is not forced to pay monthly.
Who is responsible for paying the debt on an authorized user card?
An authorized user is someone who has access to another person’s credit card and can use it to make purchases. To assist their children establish a credit history and learn how to appropriately utilize credit, parents occasionally add their adolescent children as authorized users to their credit cards, for example.
However, authorized users are not liable for the expenditures they incur on their own credit cards linked to your credit line. All charges on the credit card are the responsibility of the individual whose name appears on the account.
You’re ultimately accountable for paying off your credit card debt if you add someone else as an authorized user and they run up a large balance. Carefully select your permitted users.
What happens when the primary account holder dies?
When the principal cardholder passes away, the authorized user must stop using the credit cards. The card should be avoided even if you intend to return the money.
After the account holder’s death, someone can be sued and held personally accountable if they continue to use the account.
After the death of a person, “the best thing to do is to pay off the amount borrowed, not the total account balance, as the balance at death should go through probate,” writes Creeden in his article.
However, the wisest course of action is to never use the card in the first place, even if the cardholder has passed away.
Does debt go away after 7 years?
After seven years, an individual’s credit record will no longer be affected by late payments linked with an unpaid credit card debt. However, credit card debt that has not been paid for seven years will not be forgiven. Depending on the state’s statute of limitations, you may or may not be able to utilize the age of the debt as a winning defense after seven years of unpaid credit card debt. Between three and ten years in most states. You can still be sued, but the case will be thrown away if you establish that the debt is time-barred after that point in time.
- No of how long ago the debt was accrued, a collection agency can still sue you if the statute of limitations hasn’t run its course. Debt collectors can sue you for up to seven years if they are successful in their lawsuit. Wage garnishment and the (forced) sale of your assets can be used to collect debt once a lawsuit has been filed. And, until the loan is repaid, interest may continue to accrue, depending on the state. If you fail to pay your debts, you may potentially be sentenced to jail time. Not paying civil debt (including credit card debt) is not enough to warrant jail time, but failing to pay a court-ordered civil fine could result in time behind bars.
- In the event of a late payment of 30 days or more, the late payment will be reported to the credit reporting agencies and will appear on your credit report for a period of seven years. You’ll be written off the lender’s books, too, if you’re 120 days or more past due on payments. Credit card accounts that have been “charged off” will be listed as “Not Paid as Agreed.” Additionally, charge-offs will be listed for seven years.
- The damage to your credit score diminishes with time: Your credit score takes a hit if you have late payments or charge-offs on your credit report. It all depends on your overall credit health to see how much of an effect they have on your score. One missed payment might lower your credit score by 80 – 100 points. A charge-off can lower your credit score by as much as 110 points; the majority of this decrease comes from the late payments that were recorded on your credit report.
After seven years, you’re still responsible for any credit card debt you haven’t paid off. In states where the statute of limitations has expired, it may be preferable to work with debt collectors rather to risk a lawsuit. It’s possible to reset the statute of limitations, so it’s important to weigh all of your choices. It’s possible to negotiate a lower payment or work out a payment plan if you contact your creditor. Wage garnishment or the forced sale of your assets may be an option if the debt collector wins a case against you. Our tutorial on how to pay off credit card debt has some helpful advice.
Does executor have to pay credit card debt?
The executor of a deceased person’s credit card or other debt will not be held personally liable for the debt. An executor, on the other hand, can be held liable for mistakes made when settling an estate.
Your state’s probate court should be able to help you out if you follow the proper processes.
It is the executor’s responsibility to compile a list of the deceased’s assets and liabilities, including the car (the car loan, the credit card balance, mortgage, etc). The order in which assets are used to pay creditors is controlled by state legislation. After paying off the car loan, any residual equity would be utilized to pay for funeral fees and other expenditures associated with the death of the holder of the loan. Credit card debt would be repaid as soon as possible if there is any money left over (assuming there are no other debts that would take priority, such as federal or state tax debt).
Can executor Use deceased credit card?
Get many formal copies of this document to submit to financial institutions including credit card companies and life insurance providers, and for your own records. It is possible to receive copies of a death certificate from your funeral director, but keep in mind these legal documents come with a per-copy cost that varies from state to state and even county to county.
Prevent further credit card use
No longer valid credit cards are issued after a person dies. The deceased’s ultimate expenses, such as a funeral or cremation, should never be paid for using these funds.
Credit card fraud is the most common unintentional crime committed by authorized users following a cardholder’s death, which might land you in serious difficulty if discovered. Estate attorneys recommend collecting all credit cards, including authorized user cards, from anyone who may have them and storing or destroying them in a secure location.
Notify credit card companies of the death
You should close all credit card accounts as soon as possible after the death of the primary cardholder to prevent interest and finance costs. Do not forget to tell your bank or credit card provider when one of your co-card holders dies!
Make sure to check each credit card account to see if any automatic charges have been set up. As soon as you discover recurring charges, such as a phone or energy payment, you’ll need to cancel or move them to a different card immediately.
You should send each credit card firm a certified letter and keep a copy of your receipt when contacting them. There is a toll-free phone number on the back of the card that you can call in order to speak with a representative who can flag the account and provide you with the address where you need to mail in the proper paperwork. If you didn’t include a copy of the death certificate in your initial letter to the card issuers, they’ll ask for one when they receive your letter.
Request a credit freeze from all three credit bureaus
You’ll also need to contact all three credit reporting agenciesExperian, Equifax, and TransUnionto request a credit freeze, barring anyone from opening new credit cards or other accounts using the deceased’s name and Social Security number.
Following up by mail to request that the credit report be immediately flagged as “Deceased” is essential. No credit will be given.
Know your rights before paying debt collectors
Before distributing funds, you may be required by state law to wait for bills to arrive and to publish a public notice of the death in a newspaper.
If you’re dealing with debt collectors, it’s critical that you understand your legal rights. As long as debt collectors do not use fraudulent or abusive methods to collect a debt, the Fair Debt Collection Practice Act (FDCPA) protects you. Even if there’s a danger there won’t be enough money to go around, don’t let individual creditors try to push ahead of the queue and get paid first.
According to John Caleb Tabler of Lau & Associates in Pennsylvania, you should also ask the credit card company to file a proof of claim for the estate before you pay anything. It’s entirely up to you whether you send this request together with your written notice to the credit card company or not.
To convince a victim to pay a bill they may not owe, debt collectors can be harsh and prey on their emotions. Make sure that you never agree to a payment plan over the phone with a debt collector, even if you’re negotiating a settlement.
If you need help figuring out how to pay off a deceased person’s debts according to state law, or if you just want some general legal guidance on how to handle the final intentions of the deceased, you should consult an estate attorney.
How many points does being an authorized user affect credit?
Your credit may be impacted if you are listed as an authorized user on someone else’s account. There’s a good likelihood that being an authorized user will improve your credit rating, but the outcome is mostly out of your hands.
Being an authorized user could help you build credit.
First, let’s consider the most optimistic situation. As an authorized user on a loved one’s account, you may see an increase in your credit score.
For an authorized user account to boost your credit, three things must occur.
- The card issuer must notify the three major credit bureaus of the account. Many credit card companies report approved user activity to Equifax, TransUnion, and Experian, as well as other credit bureaus. Be careful not to assume that this is the case, though! You should check all three of your credit reports within 60 days of becoming an authorized user to make sure the account is listed.
- Negative payment records must be cleared from the account. Late credit card payments, even if they were made several years ago, aren’t helpful for a person’s credit score. In truth, your credit score is heavily influenced by the payment history on your credit reports (even those from authorized user accounts). Please add me to an account with no late payment history if my loved one is willing to do me a favor and give me access.
- The account’s credit utilization rate must be modest. In the United States, FICO and VantageScore, two of the most widely used credit score brands, both use credit scoring algorithms that emphasize your credit utilization ratio. Credit usage is a phrase used to explain the relationship between your credit card balances and your credit limit. Even if all of your payments have been made on time, if your credit reports reflect an authorized user account with a large balance compared to its credit limit, it could harm your credit ratings. Generally speaking, a credit usage of less than 30 percent is a reasonable goal.
Credit ratings might be boosted if your loved one adds you as a co-holder on an older credit card. Because of the way credit scoring algorithms work, older accounts tend to have better credit ratings.
Being an authorized user might not impact your credit at all.
In order to calculate your credit score, credit scoring models only look at the information currently on your credit report. Credit cards must appear on Equifax, TransUnion and Experian credit reports before they can damage your credit ratings. When an authorized user is added to a credit card account, it will not affect your credit rating in any manner.
Fortunately, many card issuers do disclose authorized user activity to the main credit bureaus, which is good news for consumers. In order to add you to the account, the primary account holder can inquire about the company’s credit reporting policy.
Being an authorized user could hurt your credit.
Using a loved one’s credit card might be risky in certain circumstances. If you’re the principal cardholder, your credit could be at risk if:
- The credit card company reduces your credit limit (triggering a higher credit utilization rate)
As a reminder, Experian advises that authorized users’ credit reports do not reflect negative payment history. As a result, even if the principal account holder makes late payments, your Experian credit score may still be good. Equifax and TransUnion, on the other hand, warn that bad payment history on authorized user accounts can harm both you and the principal account holder..
The debt does not attach to you because you’re an authorized user. It’s possible that if the primary account holder fails to pay on time or accrues a large balance relative to his or her credit limit, you may be removed from the account. Removing oneself from a credit card account is as simple as making a phone call or submitting an online request to the card issuer. The primary account holder can request this from some card issuers, but not all of them.
The credit card firm should contact the credit agencies to remove the account from your credit reports as soon as you no longer have access to it. Even if you’ve been removed from the account, you can still file a dispute with the credit bureaus if the account continues to appear on your credit report.
If you are the cardholder
It’s easy to delete an authorized user from a credit card account by dialing the customer support phone number on the back of your credit card.
You can prove that the action was taken by sending a letter via certified mail that mentions the customer support call and specifics such as user name, last four digits of account number or date of the call to ensure that it has been performed. If it isn’t, you have the option of lodging a complaint with the credit card company.
If you are removing yourself as an authorized user
To remove yourself from an account as an authorized user, follow the steps outlined above.
To remove yourself as an authorized user on a credit card account, call the customer support number on the back of your card.
Can I dispute being an authorized user?
Start by phoning the credit card company and requesting that they delete your name as an authorized user. You may be able to seek this modification even if you are simply the authorized user, depending on the bank.
The principal account holder may be required to make these kinds of account adjustments by some credit card companies. In this scenario, you’ll need to contact the person who owns the account and ask them to remove you from it.
To have the record erased from your credit report, you must follow the credit report dispute process if the primary account holder cannot or will not call for you, e.g. you no longer speak, and the credit card company won’t remove you without their permission.
You will no longer be able to use the credit card account if you are removed from the account. If you have a physical copy of the credit card, destroy it to prevent unauthorized purchases. For all purchases, even those made by you, the primary account holder bears responsibility. (Community property states may make an exemption for couples.)
If the account still appears on your credit report after you remove yourself as an authorized user, you can challenge the account and get it erased. You will no longer be able to use the account’s history in calculating your credit score. Depending on your credit report and account history, this could either be helpful or negative for your credit score.
