What happens to your debt if you die?

[E equals MC2]

A friend of mine passed away several months ago. This got me thinking, what happens to his debt? I know when he and I went to Europe for fun, he went on a credit...

Is it just a loss on the CC company or do they try to collect it from family members (highly doubt it)?

If so, a suicidal person can go all out bling-bling, stay at extravagant resorts, spend money like they don't care for several months on credit and just die?

 

[FoBoT]

unsecured debt, it goes away, the loaner is out of luck

secured debt, the item securing the debt and/or the estate of the deceased pays the debt

so credit card companies are SOL

 

[BigJ]

From my understanding, whatever you own is going to be sold off to help pay for the debt. I also believe that they'll get their cut out of your life insurance if you have it.

If there's not enough to pay off all the debt and it is solely yours, they're SOL.

 

[Boo Boo]

your family will dig you up and piss on your grave. saying thanks

 

[kranky]

In general, the deceased's estate is liable for any debt, even if unsecured. Family members are not responsible. However, if the account is a joint account with another person, that other person is equally liable for the debt on the account.

Originally posted by: E equals MC2
If so, a suicidal person can go all out bling-bling, stay at extravagant resorts, spend money like they don't care for several months on credit and just die?

Essentially, yes, if all the debt is on unsecured credit cards.

Heck, on some boards I see people from other countries who go to college here asking how to get large credit lines on credit cards so they can max them out before returning to their home country. They have no intention of paying. As if those of us who do pay their bills won't get stuck with that bill as well.

 

[BrokenVisage]

It goes to heaven with you where you must work it off by driving a shuttle bus to and from Purgatory City.

 

[Agentbolt]

The CC companies will call the family and tell them they have a "moral obligation" to pay the bills off, sometimes, but there's no legal recourse.

 

[her209]

So if someone pays for their funeral costs prior to croaking, the CC companies are SOL.

 

[nakedfrog]

Originally posted by: kranky
Heck, on some boards I see people from other countries who go to college here asking how to get large credit lines on credit cards so they can max them out before returning to their home country. They have no intention of paying. As if those of us who do pay their bills won't get stuck with that bill as well.

That blows.

 

[E equals MC2]

Originally posted by: nakedfrog

Originally posted by: kranky
Heck, on some boards I see people from other countries who go to college here asking how to get large credit lines on credit cards so they can max them out before returning to their home country. They have no intention of paying. As if those of us who do pay their bills won't get stuck with that bill as well.

That blows.

How is that possible? You have to have a SS# to apply for CC. Non-US residents have the CC#.

If you use your home country's SS# (or whatever's equilavent), then the debt simply follows you internationally.

 

[PingSpike]

I heard they sell your dead body to science to cover part of their losses.

 

[D1gger]

I'm just going through this with my brother. He died in a car accident in October, and was heavily in debt. Most of it on unsecured credit cards, and some in a co-signed car loan (with his daughter as the owner of the car). He had virtually no assets when he died (less than $100 in the bank, his car was totalled with no insurance, he rented a basement suite and his TV, stereo, clothes, etc are not worth anything). The net of it is:

His life insurance is paid directly to the named beneficiaries - not into the estate - so the CC companies have no claim on this money.
He had life insurance on the car loan - so it has been paid off by that policy - nice bonus for my niece who was actually making the payments on the loan.
His CC debts are going to be written off by the CC companies - if there had been any money in the estate they would be entitled to their share.

This is in Canada, so YMMV in the US or elsewhere.

 

[JeffreyLebowski]

A little known fact is, the credit card companies know the secret to bringing back the dead. When you die, they bring you back and make you work in their call centers or for a collection agency.

 

[Soundmanred]

Originally posted by: JeffreyLebowski
A little known fact is, the credit card companies know the secret to bringing back the dead. When you die, they bring you back and make you work in their call centers or for a collection agency.

That WOULD explain the lethargy and the "I wish I were dead" attitude...

 

[kranky]

Originally posted by: E equals MC2How is that possible? You have to have a SS# to apply for CC. Non-US residents have the CC#.

Not all banks require an SS# for a credit card.

If you use your home country's SS# (or whatever's equilavent), then the debt simply follows you internationally.

Nope. If the bank has branches in the other country, they can still try to collect (assuming they even know where the person went), but other than that it's likely to be impractical. Let's say someone runs up a $10,000 CC bill on XYZ bank. The person leaves the US and returns to their home country.

All XYZ bank knows is that they aren't getting payments. They send nasty letters and make phone calls, but get nowhere since the customer isn't reachable any more. After 6-12 months, XYZ bank sells the bad debt to some bill collector.

Now how is that bill collector (or XYZ bank, for that matter) going to find the customer, and even if they do, how they are going to collect the $10,000? Even if they know exactly what country the person ran off to, they are going to immediately conclude it's not worth spending the money to pursue them in another country.

Now imagine the customer owes $10,000 to XYZ bank, $10,000 to Megabank, $10,000 to First Citiwide Change Bank and $10,000 to Kwik-E-Bank. Nice haul for the customer, but no single bank is owed enough to make an international chase worthwhile. It's not like the bank can pick up the phone and demand the Mulvanian police go out and find John Doe and arrest him for leaving the US with unpaid bills.

 

[hellokeith]

Unsecured creditors, if applying on time, can share in the estate. So if a house or call was for sale, then the creditors could apply to the probate judge. That's not to say they will get anything, because secured creditors get first stake.

Also, some states have homestead/car laws such that a dependent cannot have their only residence/transportation taken away from them.

 

[oiprocs]

What happens with student loans? Is that secured or unsecured?

 

[HombrePequeno]

Originally posted by: kranky

Originally posted by: E equals MC2How is that possible? You have to have a SS# to apply for CC. Non-US residents have the CC#.

Not all banks require an SS# for a credit card.

If you use your home country's SS# (or whatever's equilavent), then the debt simply follows you internationally.

Nope. If the bank has branches in the other country, they can still try to collect (assuming they even know where the person went), but other than that it's likely to be impractical. Let's say someone runs up a $10,000 CC bill on XYZ bank. The person leaves the US and returns to their home country.

All XYZ bank knows is that they aren't getting payments. They send nasty letters and make phone calls, but get nowhere since the customer isn't reachable any more. After 6-12 months, XYZ bank sells the bad debt to some bill collector.

Now how is that bill collector (or XYZ bank, for that matter) going to find the customer, and even if they do, how they are going to collect the $10,000? Even if they know exactly what country the person ran off to, they are going to immediately conclude it's not worth spending the money to pursue them in another country.

Now imagine the customer owes $10,000 to XYZ bank, $10,000 to Megabank, $10,000 to First Citiwide Change Bank and $10,000 to Kwik-E-Bank. Nice haul for the customer, but no single bank is owed enough to make an international chase worthwhile. It's not like the bank can pick up the phone and demand the Mulvanian police go out and find John Doe and arrest him for leaving the US with unpaid bills.

If they're looking to run up debt on a VISA credit card, their credit score will be affected in their country. VISA spans over 21,000 financial institutions so unless they're from some backwater country where VISA isn't even heard of, their credit score is screwed.

 

[Vic]

The life insurance commercials on late night TV are all telling the truth and, after you die, your family will be sold into slavery to pay off your debts.

 

[jpeyton]

Poof, it disappears like magic.

 

[razor2025]

Originally posted by: Oiprocs
What happens with student loans? Is that secured or unsecured?

Student loans usually require co-sign, so if you die, whomever co-signed is left with it (your spouse or parentals).

 

[razor2025]

Originally posted by: HombrePequeno


If they're looking to run up debt on a VISA credit card, their credit score will be affected in their country. VISA spans over 21,000 financial institutions so unless they're from some backwater country where VISA isn't even heard of, they're credit score is screwed.

That's hard to say. I guess if your home country was in Western Europe or Japan, they have some reach over you. However, in places like China where it' still heavily cash based, I doubt "credit" has as much importance as we do here.

 

[dullard]

Originally posted by: razor2025

Originally posted by: Oiprocs
What happens with student loans? Is that secured or unsecured?

Student loans usually require co-sign, so if you die, whomever co-signed is left with it (your spouse or parentals).

Student loans through the US government are cancelled if you die.

Link.

Death Discharge
Cancellation because of the borrower's death (or, in the case of PLUS Loans, the death of the student for whom the parent borrowed) is based on an original or certified copy of the death certificate submitted to the school (for a Federal Perkins Loan) or to the holder of the loan (for a FFEL or Direct Stafford Loan).

Same goes with consolidated loans.

 

[HombrePequeno]

Originally posted by: razor2025

Originally posted by: HombrePequeno


If they're looking to run up debt on a VISA credit card, their credit score will be affected in their country. VISA spans over 21,000 financial institutions so unless they're from some backwater country where VISA isn't even heard of, they're credit score is screwed.

That's hard to say. I guess if your home country was in Western Europe or Japan, they have some reach over you. However, in places like China where it' still heavily cash based, I doubt "credit" has as much importance as we do here.

Western Europe is still pretty cash based. I only found a few places in each city that would accept my plastic. That sucked because I was hoping to get quite a bit of reward points from my three month trip in Europe.

Securing loans though does require a credit score in most countries. So it doesn't matter if your country largely uses cash; if you're trying to get a loan and you have several thousands of dollars on your credit card that you never paid back, the bank you're getting the loan from is going to take that into consideration.

 

[Tobolo]

Originally posted by: E equals MC2

Originally posted by: nakedfrog

Originally posted by: kranky
Heck, on some boards I see people from other countries who go to college here asking how to get large credit lines on credit cards so they can max them out before returning to their home country. They have no intention of paying. As if those of us who do pay their bills won't get stuck with that bill as well.

That blows.

How is that possible? You have to have a SS# to apply for CC. Non-US residents have the CC#.

If you use your home country's SS# (or whatever's equilavent), then the debt simply follows you internationally.

Assuming that country will recognize the CC claim. If not then there is nothing that they can do.