Credit and Debt After Death: What You Need to Know

Highlights:

• When someone passes away, his or her credit reports aren't automatically closed
• You can have a death notice placed on his or her credit reports
• Review the deceased person's credit reports to help understand what open credit accounts they have

When a loved one dies, the last thing you want to think about is the person's finances. However, it's important to understand what happens to credit and debt after death.

Debt After Death: What You Need to Know

When a person dies with debt, their estate becomes responsible for paying it back. However, if there isn't enough money in the estate, then generally no one else is obligated to pay.

There are a few exceptions. You may be responsible for the deceased's debts if:

• You co-signed a credit card account with the deceased person. A co-signed account means the debt is also in your name.
• You had a joint credit card account with the person. A joint account may mean you will be responsible for repaying the debt. However, according to the Consumer Financial Protection Bureau, if you were simply an "authorized user," you will not usually have to repay the outstanding debt.
• Your spouse has died and you live in a community property state. These include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska and Oklahoma are also considered community property states, but only if you and your spouse signed a special agreement. In these states, you may be obligated to pay your deceased spouse's debt using property you shared.
• State law requires you to pay a particular debt owed by your deceased spouse. In some states, you may be responsible for paying back specific types of debt. This could include health care expenses or debts in connection with a house that you jointly owned.

Visit your state government's website to learn more about requirements where you live.

What to Do About Debt Collectors after Death

Debt collectors may contact the deceased's spouse, executor or administrator to discuss any debts left behind. What action can you take?

• You can block debt collectors from contacting you. If you are the executor of an estate, you can send a letter asking the debt collector to stop contacting you. The collector can't contact you again except to confirm that they received your letter or to inform you that the creditor plans to take action regarding the debt.
• However, this won't eliminate any debts owed. Even if you block contact from a collector, the estate may still be responsible for the debt.

What Happens to Credit Reports After Death

When someone passes away, his or her credit reports aren't closed automatically. However, once the three nationwide credit bureaus — Equifax, Experian and TransUnion — are notified someone has died, their credit reports are sealed and a death notice is placed on them.

That notification can happen one of two ways — from the executor of the person's estate or from the Social Security Administration. Estate executors or court-appointed designees, however, are encouraged to contact at least one of the three nationwide credit bureaus so that the deceased's credit report can be flagged, appropriately.

For Executors: Take these 3 steps to protect someone's credit after death

Here are some steps you can take following the death of a loved one if you are the executor of the estate or other court-appointed designee:

1. Contact a nationwide credit bureau to find out what you need to do to notify them of someone's death and get a death notice placed on their credit reports. A death notice flags a person's credit reports as "deceased - do not issue credit." If someone attempts to use the deceased person's information to apply for credit, the notice should be displayed when the deceased person's credit report is accessed, informing the creditor the person is deceased.
   
   When one bureau adds a deceased notice to the credit report, it will notify the other two, eliminating the need for you to contact all three. You can find out how to notify Equifax by clicking here.
   
   Find out what documents you will need to provide the credit bureau with proof of the person's death, along with proof that you are the authorized designee. The required documents may vary, based on your relationship with the deceased — whether he or she is a parent or spouse, for instance — and based on the credit bureau.
   
   Required information may include:
   • The person's legal name
   • The person's Social Security number
   • The person's date of birth and date of death
   • A copy of the death certificate
   • Copies of any required legal documents
   • Your full name
   • Your address (to send confirmation of death notice placement)
2. If you are also requesting a copy of the person's credit report, you will need a copy of a government-issued ID, such as a driver's license.
3. Submit the required documents to the credit bureaus. Consider making copies of everything you send and sending the documents via certified mail.
   You can mail all required information to Equifax at the following:
   
   Equifax Information Services LLC
   P.O. Box 105139
   Atlanta, GA 30348-5139
4. Review the deceased person's credit reports to understand what open accounts they have with creditors and lenders. It's a good idea to request copies of credit reports from each of the three nationwide credit bureaus, since not all lenders and creditors report to all three.
   
   You may need to contact lenders and creditors to notify them the person is deceased and the accounts need to be closed, even if the account has a zero balance. Lender and creditor contact information can be found on the credit reports. You may be required to provide a copy of the person's death certificate and other legal documents. A joint account may remain open even after one of the people has died.

It's a good idea to request copies of the deceased's credit reports from each CRA. You should then review those reports to identify any open accounts. You may also need to contact the creditors and lenders associated with those accounts to let them know about your loved one's passing.