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Sep 8 2009 12:00AM

Question

My spouse has tremendous credit card debt — more than $40,000. The debt is in his name and resulted from a failed small business. Although he is only 41, he is a diabetic, and we are wondering whether we should negotiate his debt. In addition, does my husband's debt become my debt if he becomes deceased? We have two small children and my husband has modest life insurance coverage. We are very concerned about the debt he cannot pay. Would creditors pursue me for the money should he pass? I have pristine credit, and do not know how I would cope if I should find myself widowed with young children and all this debt.

Answer


"If you are the surviving spouse, you are legally responsible for your late partner's credit card bills," said FPA member, Vincent R. Barbera, CFP®, of TGS Financial Advisors.

According to PrivacyMatters.com: "The general rule is that creditors usually have six months to file a claim to collect unpaid credit card charges. And, in cases where the surviving spouse can't pay the outstanding charges, the credit card company will make arrangements to collect from the estate — actually taking items, including luxury items, IRA accounts and even property, to offset the outstanding credit card charges. If, however, there is no estate to collect from, credit card companies can't pursue collections from the family. They can ask surviving family members to remit the credit card debt, but they can't legally force them to pay."

Barbera suggests that you check with your state of residence to determine the applicable laws in your state. In addition, he noted the following: "Before you negotiate with the credit card companies directly, I would recommend that you contact a licensed credit counselor in your area to map out the most appropriate strategy to pay down your husband's outstanding debt." A good source is your local credit counseling service. Find a licensed credit counselor in your area at the National Foundation for Credit Counseling. 

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