Hello all. I'm hoping someone has gone through the same situation that my husband and I are going through right now...here's the story: My husband's mother passed away on January 1st after a very short illness. She had gone into the hospital on Dec 30th and quickly deteriorated and passed away on New Year's Day. She was only 46. She did not have a will. My husband was her only child and she was not married, so in our state, he is the legal heir to everything, including, we're assuming, her credit debt. Her only assets are her house (a small townhouse valued around $70- 75K, and she owes about $53K); a car ( a 1988 Chevy Camaro-paid off), and about $1700 in a checking account. The day she passed away, she had credit debt totaling $21K. She had a life insurance policy, and after the funeral home made their claim on the money, there is about $54K left over. The problem is, we're not exactly sure how to proceed. Do we need to pay the credit debt off with her life insurance money or sell the house and use that money to pay off the credit debt? If we sell the house, after closing costs, realtor's fee, etc, there may be about $15,000 left. not enough to pay all the credit debt. If we do that, can we just tell the creditors that that is all the money that there is and they need to write it off? Will they do that? I know that when an account has been charged off for living people, that they will settle the debt for much less than what is owed, kind of like taking what they can get. I know this is kind of long to read, but we've met with 2 lawyers already, and they can't even give us a strait answer about any of this. I appreciate any help anyone can give us. THANKS!!!!
First of all. my sympathy to you and your family for the loss. As to business, the estate is supposed to be used to pay creditors. The secured creditora have priority. Here's what I'd do. Report the death and send a copy of the death certficate and a copy of the obiturary notice to each credit card company. Then, see what they do. If they ask, tell them there was no will . Then, see what happens. If they file for discovery about the estate. you'll end up paying but, they may well just write the thing off. A life insurance policy goes directly to the beneficary and will avoid probate. Who wants a 4 y/o car. The mortage company will have priority over the unsecured creditors. Bottom line, they may feel it's just not worth pursuing. Good luck!
Did her credit cards have the credit protection insurance? If so, the credit cards balances should be paid in full by the insurance. Also, my condolences.
LKH- No, unfortunately, none of her cards had credit protection. We were hoping that they did, because she was a bank manager for 11 years, we thought that she may have thought ahead and done those types of things. Go figure. I'll tell you what, though, it sure made me wake up to some realities in life. I had never thought about a will or life insurance or anything like that until this happened. I thought, I'm so young, I don't need to worry about that for years and years. But she was only 46...puts a lot into perspective.
I'm so sorry to hear about your loss. We had a similar situation happen last August (house fire). Shoot me an email and maybe we can discuss your options. I will say this, the credit cards didn't get paid. They were all in her name only so the surviving spouse wasn't legally responsible. In fact, we were shocked to get a bill from MBNA for a Visa she had with a $12k balance!!! Egads! And this was a woman who didn't like anything more fancy than Target or KMart. Anyway, we called them and told them what happened and the rep said "No problem, the account has been zeroed out. You don't have to worry about anything and we're sorry for your loss." The ironic twist to that is the funeral home offers a 90 days no-payment finance plan for their services. Guess which company provided the loan servicing and credit app? yup, MBNA.
Hey Jonesing, I tried to get your email from your profile, but it said that it wasn't available. I'd like to hear more about how you dealt with your situation. THANKS! Flagirl
Technically it is NOT your debt to pay...BUT they MAY try to ATTACH the INSURANCE or the PROPERTY... They can write it off to save you paying out of YOUR pocket...NOT YOUR ACCOUNT(S)!!! If you end up having to pay for some reason, I would DEMAND that they assign the accounts to you with the credit history...(if it's good history)... GOOD LUCK IN THIS TRYING TIME.
Flagirl, so sorry to hear of your loss. Keepmine told the full story. Life insurance proceeds cannot be attached by creditors - a unique protection offered only by life insurance, and one of the things that makes it so valuable. It enables a person to take care of their family financially, no matter what other circumstances they leave behind when they pass.
I'm so sorry to hear about your loss - sounds like it was very fast and unexpected. As has been advised (quite nicely) - DON'T worry or fret. You're in a good position. Do exactly as was advised (sell house, proceeds pay creditors, then sell car, then game over). Life insurance is most certainly yours and yours alone. I liked the previous advise to send notice to the card companies and see what they do. The amount here is really small (relatively speaking), so it's quite likely much of it will go away. Put the $ from the house in a savings account and treat it like an escrow account - that way if anything does arise, you're in the clear. One more thing- your comment about credit insurance -- while I'm sure it would have been helpful, for most folks it's a HORRIBLE deal- Average $.75 per $100 balance per month... $21,000 total card debt = $147/month ... or ANOTHER 9% PER YEAR. Most folks would be better off putting the $147 per month into a savings account and building a "rainy day" fund. Again- please accept my sympathies and don't worry about the credit issues. -mj
I just want to thank everyone that responded to my post. The advice has been invaluable. My husband and I will definitely put it to good use. And just so everyone knows, I've posted occasionally to this board for over a year or so, and with everyone's help here, I've raised my scores from high 400's to high 600's! We've just purchased our first house and will be closing on it on March 28th! This is the best board (credit or not) that I've ever read. I really appreciate all the help I've received in the past couple of days and for the entire course of time I've been reading the board. THANKS SO MUCH!!! Flagirl
