What happens to credit card debts when you die

King_Weasel

Happily for me this is a hypothetical question but in the best Boy Scout tradition it would be useful to know.

I believe that like any other debt a credit card debt is payable out of the deceased's estate. But if someone dies from a surfeit of stoozing what would happen to their 0% deal? Does this also stop instantly upon death or could it be transferred to whoever becomes responsible for the debt, giving them longer to pay it off without interest charges?

ricky_v

I believe unsecured debt is at the bottom of the pecking order before funeral costs, tax debts and secured debt such as a mortgage.

pvt

It's certainly recoverable from the estate, assuming there is sufficient in the estate to pay creditors. As Ricky says, they would think they would be one of the last creditors payable.


As for interest, the 0% is academic - They cannot charge any interest from the day the deceased deceases.

Anthorn

In law it can be recovered including interest from the estate. The exception is where it is a joint account where the other party is responsible for the debt which might be paid from the estate anyway. But in practice it sometimes differs. Can you imagine the headlines if an evil bank pursues a poor, recently bereaved widow for her husbands debt? In that case the bank might well choose to write off the debt in order to avoid such a circumstance.

bouncydog1

You can't have joint credit card accounts so no other party is liable. The debt must be settled from the assets of the estate.

Anthorn

bouncydog1 wrote: »

You can't have joint credit card accounts so no other party is liable. The debt must be settled from the assets of the estate.

[nitpick] The reply was in general terms and not specifically related to credit cards[/nitpick]

PeacefulWaters

pvt wrote: »

They cannot charge any interest from the day the deceased deceases.

There is no law, regulation or code of practice that I'm aware of that demands interest stops being charged on death.

pvt

PeacefulWaters wrote: »

There is no law, regulation or code of practice that I'm aware of that demands interest stops being charged on death.

The contract or agreement that existed between the loan or card provider and the deceased would terminate on the death of the deceased. The lender would have no justification for charging the estate further interest. All the executors would need to pay is the outstanding balance plus interest up to the date of death.

Otherwise, if the deceased had taken out a £500 PDL just prior to popping their clogs and the executors took 9 months (not atypical) to wrap up affairs and settle it, there would be no estate left!

Tixy

It is certainly usual practice that consumer credit creditors cease charging interest immeditately once they are notified of the death by the executors and whilst the estate is dealt with.

But I am unaware that there is any legislation which requires them to do so.

And in most credit card agreements there is a clause along the lines of this one (ASDA)

.......or in the event of your death, we shall be entitled:
(a) without notice, to end, restrict or suspend your right, and/or the right of any Additional Cardholder, to use the Card, PIN or Card number;
(b) to charge interest forthwith at the standard rate for Standard Purchases on any Promotional Purchases and/or Balance Transfers then outstanding on the Account;
and/or
(c) subject to serving on you any notice required by law, to end this Agreement (and, for the avoidance of doubt, each part of this Agreement).

or this one (HSBC)

On your death, the obligations under this Agreement will continue until all Cards have been cut in half and returned to us and the balance on the Account has been paid.

I'd be suprised if they were in the T&Cs if there is specific legislation that means they are not valid terms

MrPlinky

Seems quite confusing to me.

What would happen in this specific example?

Say I owe £30000 on a credit card, and have a joint mortgage with my wife of £100000 on a house worth £120000.

If I die, and the only assets I have are the joint equity on the house, and £30000 in a pension pot.

Who gets what after I die?

???

Tixy

MrPlinky wrote: »

Seems quite confusing to me.

What would happen in this specific example?

Say I owe £30000 on a credit card, and have a joint mortgage with my wife of £100000 on a house worth £120000.

If I die, and the only assets I have are the joint equity on the house, and £30000 in a pension pot.

Who gets what after I die?

???

House owned as joint tenants or tenants in common?