Q: Am I responsible for my Father’s debt?
He recently passed away and he had a credit card that he had put my name on so I could shop for him and pay his bills. It was not a joint account – I guess I was an authorized user. I don’t have the money to pay this bill ($5000) and the credit card company is saying that I am responsible. What do you think?
A: Being an authorized user isn’t the same thing as being the owner of the card. When you are the card owner, you sign a contract that holds you personally liable for the debts that are racked up.
Your father’s debts, including this credit card debt, now belong to his estate. If he died penniless, then the debts will go away. But they are not yours. However, if your credit was also utilized to obtain the card, you may be liable for your father’s debts.
The first thing you should do is talk to the executor of your father’s estate. The executor of the estate may have the funds to pay the debt and should do so. The executor of the estate will have to contact the credit card company to notify them of the death of the credit card holder.
In most cases, once the credit card company is notified, the credit card is placed on hold and a different division of the company takes over and works with the estate to get the final bill paid. The account will no longer be active, and you will be unable to charge anything more on it. If the credit card was only in your father’s name and all of the charges made on the card were for your father’s benefit, you may not be obligated to pay the credit card company for the charges incurred on the card.
You can’t blame the credit card company for trying to collect. For more information, consult an estate attorney or an attorney who has experience in dealing with credit card company issues and debts.
Keep in mind that if you made charges on the card and they were for your benefit, you will have to pay these charges back, and if the credit card was actually in both of your names, you may be obligated to repay all of the charges on the card.
If you find that you are not responsible for the charges and the credit card company harasses you, you may be able to file a complaint with the Federal Trade Commission, at www.ftc.gov.
Good luck, and please accept my condolences on the loss of your father.
Q: I can’t tell you how having your impartial advice has motivated me. I am also amazed at how messed up credit reports can be. Credit reporting bureaus aren’t the easiest groups to work with.
Here’s my question. My bankruptcy was discharged in October, 2003. Before I went bankrupt, I bought at car and got a loan at 13.5 percent.
My mom just got an offer from her credit card company to pay off items up to $15,000. Her loan would have a lifetime interest rate of 2.9 percent.
My mom wants to pay off my car loan with that. Then, I would make the credit card payments. This may be a no-brainer, but is this something I should do?
Thank you for any advice you may have.
A: It is a no-brainer, but only if you have the brains to make her payments on time. If you fail to make these payments, it’s your mom who will be on the hook, and her credit will be ruined.
Before you take your mom up on her incredibly generous offer to bail you out, you need to examine the mismanagement of your money that led you to bankruptcy court. Do you understand what your financial mistakes were and how you can avoid them in the future?
Too often, I hear from readers who have gone bankrupt and then gone back to their bad habits, and wind up in a worse position down the line.
If your mother refinances your debt for you, make yourself a promise that you will always pay your bills on time, and never again charge anything you can’t pay off at the end of the month.
If you do this, your credit will start to improve dramatically in another couple of years and you will be able to clean up your credit history and raise your credit score.
Regarding this car debt, my suggestion to you is to continue to make the same payments you were making when the debt was at 13.5 percent. You will be surprised both by how quickly you will be able to make this debt go away and how good you will feel once it is off your shoulders for good.