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Covid 19 deaths and CC question

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Anonymous
Not applicable

Covid 19 deaths and CC question

So there are now over 660,000 deaths from Covid in the USA. I am sure many of these people had credit cards.

What are the lenders doing about this? Usually when a CC goes unpaid it is charged off and sold to a CA.

However, you can not sue a dead person. So I doubt the CA would want to buy this debt. 

People have no time to prepare unlike a cancer patient. So how do the banks collect on all these CO's? It is similar to someone who dies in a car accident. No prior knowledge or preperation.

 

Banks would have a hard time absorbing all this bad debt so how is this being handled?

Thank you in advance.

Mark

24 REPLIES 24
Trini88
Established Contributor

Re: Covid 19 deaths and CC question

I was legit wondering this as well. I just said to myself that if either me or my husband dies, we have to pay on the other's debt BUT if we both die.....what happens to the debt.....



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Message 2 of 25
FinStar
Moderator Emeritus

Re: Covid 19 deaths and CC question

That's why financial institutions have loan loss reserves. If the financial institution (or CA) is unable to collect, they takes a loss (e.g. credit cards, automobiles, homes, etc.). Unless, the financial institution is able to recover any funds through an individual's estate, if applicable. In addition to the unfortunate number of people lost during the pandemic, there were also major financial impacts with people losing their employment.

 

As a result, the vast majority of financial institutions tightened the reins in lending criteria, reduced/cut or froze credit lines, exited unprofitable partnerships, etc.

Message 3 of 25
spiritcraft1
Valued Contributor

Re: Covid 19 deaths and CC question

On a stricktly legal basis, a spouse is not liable for another spouses debt correct?  Perhaps the "estate" is liable but I don't think a CC debt in one persons name "transfers" upon death.


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Message 4 of 25
Anonymous
Not applicable

Re: Covid 19 deaths and CC question


@spiritcraft1 wrote:

On a stricktly legal basis, a spouse is not liable for another spouses debt correct?  Perhaps the "estate" is liable but I don't think a CC debt in one persons name "transfers" upon death.


Well I do know if they where both on a credit card together then they are liable for the debt. Either or.

 

That is a good question. I  have no idea if a spouse is liable for the debt if it is a card just in the deceased persons name.

 

Is the answer the same no matter where you live or is it not the same depending what state you live in? I  have no idea.

Are there any credit lawyers on this site? that would help

Thanks

Mark

Message 5 of 25
Anonymous
Not applicable

Re: Covid 19 deaths and CC question


@FinStar wrote:

That's why financial institutions have loan loss reserves. If the financial institution (or CA) is unable to collect, they takes a loss (e.g. credit cards, automobiles, homes, etc.). Unless, the financial institution is able to recover any funds through an individual's estate, if applicable. In addition to the unfortunate number of people lost during the pandemic, there were also major financial impacts with people losing their employment.

 

As a result, the vast majority of financial institutions tightened the reins in lending criteria, reduced/cut or froze credit lines, exited unprofitable partnerships, etc.


lets say someone lives alone in a rental apartment. Dies from Covid. Any assets he or she has can not be attached to once they die. I am not a lawyer so I am not sure. I do know as I said prior you can not sue a deceased person. Attach to a ring in a draw? I have no idea. This is why I posted this I would like to know as I have to deal with the families every day and they ask me questions and I tell them I do not know. That is a pretty bad answer but I rather say nothing then give wrong info. I am asked the questions all the time about a creditor by family members. I am just a forensic pathologist and I do not know enough about the law to guide anyone. This would really help.

Thanks

Mark

Message 6 of 25
Puppetmaster
Contributor

Re: Covid 19 deaths and CC question

@Anonymous,

 

660,000 deaths from COVID is just a drop in the bucket of all deaths, as far as total deaths that credit institutions deal with.  When someone dies, the executor of their estate is legally responsible for paying whatever debts there may be, from whatever assets there may be, before distributing whatever is left to whatever heirs there may be.  In some cases, where assets and obligations are jointly owned, the surviving person remains responsible.  How the death of one spouse affects the other spouse's rights and redponsibilities depends in large part upon whether or not they had a "community marriage" or "community property agreement."  In some states, marriages are community property marriages, and in some they are not.  Courts oversee how assets and luabilities are handled by estates, and the only legitimate circumstance in which a creditor wouldn't get paid would be in the event that the estate is insolvent.  All of the above is not legal advice, and is oversimplified to convey a general understanding of how creditors get paid after someone dies, regardless whether their death is from COVID or any other cause.

 


@Anonymous wrote:

So there are now over 660,000 deaths from Covid in the USA. I am sure many of these people had credit cards.

What are the lenders doing about this? Usually when a CC goes unpaid it is charged off and sold to a CA.

However, you can not sue a dead person. So I doubt the CA would want to buy this debt. 

People have no time to prepare unlike a cancer patient. So how do the banks collect on all these CO's? It is similar to someone who dies in a car accident. No prior knowledge or preperation.

 

Banks would have a hard time absorbing all this bad debt so how is this being handled?

Thank you in advance.

Mark


 






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Message 7 of 25
Brian_Earl_Spilner
Credit Mentor

Re: Covid 19 deaths and CC question

It's no different than a normal death. They'll go to the estate to get paid. If there's no will it goes to the next closest relative or spouse. If they don't have family, the state will try to locate the closest relative. If they can't find one, the estate becomes property of the state. I'm sure there's a way for CAs to make a claim with the state on the unclaimed estate.

    
Message 8 of 25
coldfusion
Community Leader
Mega Contributor

Re: Covid 19 deaths and CC question


@Puppetmaster wrote:

660,000 deaths from COVID is just a drop in the bucket of all deaths, as far as total deaths that credit institutions deal with.  When someone dies, the executor of their estate is legally responsible for paying whatever debts there may be, from whatever assets there may be, before distributing whatever is left to whatever heirs there may be.  In some cases, where assets and obligations are jointly owned, the surviving person remains responsible.  How the death of one spouse affects the other spouse's rights and redponsibilities depends in large part upon whether or not they had a "community marriage" or "community property agreement."  In some states, marriages are community property marriages, and in some they are not.  Courts oversee how assets and luabilities are handled by estates, and the only legitimate circumstance in which a creditor wouldn't get paid would be in the event that the estate is insolvent.  All of the above is not legal advice, and is oversimplified to convey a general understanding of how creditors get paid after someone dies, regardless whether their death is from COVID or any other cause.

You pretty much summed it all up.  

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Message 9 of 25
Cowboys4Life
Frequent Contributor

Re: Covid 19 deaths and CC question


@Anonymous wrote:

So there are now over 660,000 deaths from Covid in the USA. I am sure many of these people had credit cards.

What are the lenders doing about this? Usually when a CC goes unpaid it is charged off and sold to a CA.

However, you can not sue a dead person. So I doubt the CA would want to buy this debt. 

People have no time to prepare unlike a cancer patient. So how do the banks collect on all these CO's? It is similar to someone who dies in a car accident. No prior knowledge or preperation.

 

Banks would have a hard time absorbing all this bad debt so how is this being handled?

Thank you in advance.

Mark


First and foremost HOW the consumer dies is not a factor in what the creditors do.  Having a covid cause attached to the birth certificate does not give any special consideration over any other cause of death. How creditors handle the account is the same as before the current nonsense.

Using a married couple as an example.  If this is a community property state the surviving spouse could very well be responsible for the debt.  If it is a joint account then it can remain open as long as the surviving spouse continues to make the payments but as a joint account they are legally responsible for the entire debt.  Any accounts held strictly by the consumer who passes are notified by the executor of the estate that the consumer has passed.   Typically a letter and a copy of the death certificate are all that are needed to close the account and get a final balance.

Before ANY assets can be distributed to heirs all debts of the deceased are required to be paid.  This is where the executor opens probate.  If there are sufficient assets they can simply use them to pay off the accounts and move on.  If there are limited assets compared to the debts then they open probate and creditors have 90 days to make a claim against the estate.  NO they do not have to sue the consumer/deceased person.  The majority of the time they do not even have to sue the estate.  Once a creditor makes a claim against the estate and the 90 days closes then the court decides which claims can and will be paid until assets run out or all claims are paid.  Once that is finished then any remaining assets are distributed to the intended heirs.  In order to pay claims thay may mean selling items of value that are not protected by state laws for a surviving spouse.  So in the case of someone who does not have a spouse but does have heirs (such as kids or grand kids) this is where heirs get upset when they find out that the family home has a mortgage that has to be paid if they want to inherit or that Grandad had a lot of credit card debt and claims were filed against the estate and his car, bank accounts, etc. will be used to pay the debts with what they thought was their inheritance first.  Especially the home if they can't qualify for their own mortgage to buy it out from the current lender.

Someone who dies without assets and a will (intestate) the creditors can open a claim but they get nothing because there is nothing to attach to liquidate to pay them.  If there are few assets many creditors don't even bother to file a claim and use their business loss insurance to cover the account.  

For creditors who have a claim and the estate has siginficant assets there is another scenario:  the creditor failing or forgetting to file a claim against the estate.  It still happens today where a major creditor fails to file a timely claim for an account of a deceased consumer.  Once probate closes and the estate is settled all future claims are barred.  There is nothing the creditor can do once probate concludes.

There are lawsuits against estates all the time.  Most often it is usually heirs suing each other over disputes over the assets.  However, if a creditor feels the executor/heirs are hiding assets to intentionally keep them for themselves and avoid paying creditors first as required by law then the estate, executor and heirs can all be sued and have to explain to the court where the assets are or went.  

All of this is the big reason that EVERYONE should draw up a will to designate where their assets will go upon their passing.  It is also why hiring a good estate lawyer when the person does pass is essential to handling the matter cleanly if there are a good amount of assets and the executor has little to no experience in how to properly dispose of and distribute an estate.

Message 10 of 25
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