Is Your Spouse Liable For Your Debt When You Die?
What happens to your debt after you die? Is your spouse liable for it? A reader, JWC, had this question about debt-after-death:
I owe a substantial amount on credit cards and am trying to pay it down.
My wife has no idea that the balance is so high as the cards are in my name only and I make the payments.
I am 69 years old and am concerned about passing this debt to my wife in case of death before I am able to pay it off.
Would she be responsible even though she did not co sign for the cards? Practically all of our assets are in her name.
Assuming that she would be liable, what do you think about a term life policy to cover the debt? I am in pretty good health and should have no trouble qualifying for at least a standard rate.
Thanks for your question JWC.
Yes, your spouse will most likely be liable for your entire debt if you were to pass away. I say most likely because the laws in each state can vary. That is something you will have to ask an attorney in your state.
Now, with that said, please consider the following options to resolve your situation.
- Term Life – Term life is a great stop-gap, but please don’t stop there. You do need to know that you’re covered in case you die before you can arrange to pay off your debt.
Make sure your coverage amount at least provides for your current debt plus your funeral expenses.
- Speak with a debt negotiation expert – Debt negotiation experts can literally save you thousands of dollars and help you pay down your debt faster.
In some cases they can reduce your debt to as little as 40% of what you owe.The downside is, they will close your credit accounts in order to negotiate.
This will lower your credit score. It may mean that it will take a year or two for your credit to return to it’s previous number.
- Speak with a lawyer that specializes in estate planning – In the event that you are not able to pay down all of your debt before you pass away, an estate planner can help you protect your assets, and your wife.
You should be able to have a free consultation with a law office in your area.
Remember that it is never too late or too early to start planning your estate. Even if you think you don’t have much to pass on, there are a variety of ways to ensure that your assets (and your wife’s) stay in the family. An hour with a lawyer who specializes in this will set your mind at ease.
As far as debt negotiation experts go, I highly recommend Sam Sky. We had an interview with him several weeks ago where he discussed the different debt negotiation options.
Sam has promised that he will respond to any reader questions we send him about debt negotiation.
You can contact him about your specific situation here. Sam will go over your options, and show you how he can help you get out from under your debt.
How Long Can A Merchant Wait To Charge Your Credit Card?
We had two readers, Adam and Alisha, who wondered how long a merchant can hold a transaction before charging your credit card:
How long can a retailer wait to charge my credit card? I saw a purchase on my credit card in Feb.
However I did not make any purchases at this store in Feb. I think my husband may have made a purchase in early to mid December, but nothing in Feb.
I called Visa and was told that I would have to call the individual bank that issued my credit card in order to get that answer.
I don’t know which cards you have, but in order to know for sure, just call the number that’s on the back of your credit card. Ask them how long a merchant can hold a transaction before putting it through your account.
Also Alisha, in your situation – If you do not recognize the charge on your account, it could be a case of identity theft.
Talk to your husband. Ask him if he remembers the charge. If he does not, then the best policy is to be careful.
Call and cancel your card, and dispute the fraudulent charge. It really is better to be safe than sorry. Identity thieves occasionally charge a small amount to a stolen credit card – just to see if the charge goes through. If the charge does go through, they go on to use the credit card for larger amounts.
Thanks for your questions!
If You Pay Your Credit Card Balance In Full, Can You Negotiate?
A reader, Sherry, asked this question:
We will be getting some money from the sale of a house soon (but we’re practically giving the house away due to the economy).
We owe $27,000 in credit card debt (most of it used to refurbish the house). By paying the debt in full will credit card companies give you a break, like a percent reduction in what you owe? Anything? Any advice?
Yes, when you make a lump sum payment like that you can usually negotiate to reduce your total balance before you pay it down. However, in some states the forgiven amount is taxable, so be careful of that.
I would definitely recommend that you speak with Sam, our resident Debt Negotiator. His company has a record of making lump-sum settlements at drastically reduced amounts. In some cases he helps people settle for less than half of the total amount they owe.
You can ask him your questions, and find out whether or not debt negotiation can reduce your debt by filling out a short form here.
I do not know of any way to negotiate the total debt on a credit card without closing out your credit accounts though, so be warned of that before you start.
If you are going to do the debt negotiation yourself, make sure that you get everything in writing. Otherwise you may find that the company ends up selling that portion of your debt to a collection company, even though you made a settlement with them.
Also, if you do the negotiations yourself (or possibly with some negotiation companies – I’m not sure about Sam’s policy) it may be necessary to go past due on your credit accounts for a least a month. This is because it’s usually only the collection department that is trained to negotiate debt.
If you have any more question about the process, please feel free to come back and ask.
Thanks for your question!
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