I really should know this, and from what I gather your family assumes your debt when you die, but that hardly seems fair to me. What about someone who owes a bunch of money but doesn’t have life insurance and leaves nothing to their family? Why are the survivors responsible for the bad financial planning of a family member? How enforceable are such laws (if they exist in the first place)?
IANA lawyer, YMMV, etc.
I can relate what happened when my oldest sister died. At the time of her death (in Florida, if that makes a difference) she had two adult sons and was sharing an apartment with my older brother.
My sister had credit card debt. She had no life insurance and no assets. When we went to help my brother sort things out, it was a matter of calling the credit card companies and reporting that the account holder was deceased. Some wanted us to fax them a copy of the death certificate. Some didn’t. But as far as I can tell, the debt was, in effect, erased.
If you are married they will probably try to collect from your spouse. But I don’t think that will work unless the spouse signed the debt agreement. They can also try to take money from your estate if you leave money to others.
If you are not married or you don’t have any money left when you die there is probably nothing the company can do, they can’t collect money from a dead person. I’m sure a lawyer or CPA can provide a better answer.
The answer depends on the terms of the debt as well as state law, especially state marriage laws.
But I think the basics go something like this: Upon your death, you leave behind an estate. An estate is the property one owns and leaves behind when one dies. Some of this property might be jointly owned–most commonly by one’s spouse. Collecting from an estate might mean liquidating assets that a spouse jointly owns, or that an heir would otherwise receive in the event of a death in which there were no outstanding debts. Whether one’s spouse is responsible for paying these debts will depend on the debt and the joint ownership status of the various parts of the estate.
What happens to a debt upon death is frequently determined by the express terms of the debt instrument. Many student loans, for example, are canceled upon death according to the express terms of the loan. But some debt is explicit about the creditors ability to collect from your estate, and I believe that is the default in most states if nothing else has been negotiated.
I’ll just mention the Grateful Dead (the folkloric motif, not the band), in which creditors are mistreating or failing to honor a corpse. A generous stranger pays the debt, and the spirit of the deceased debtor helps him out of tricky situations later out of gratitude, thus the name. No legal standing, of course, but the idea goes back at least two thousand years, and I have no doubt that Visa and MasterCard would try preventing burial if they thought they could get somebody to step up and pay the debt.
Here’s a thread we did on this last week: Your debts, when you die. - Factual Questions - Straight Dope Message Board
Ah, thanks! I swear, I did a search - maybe I mistyped something.
You’re welcome.