Bills can become zombies as inheriting debt can sometimes happen


Inheriting debt can happen in some situations, though debt usually dies with the person whom incurred it. Image from Wikimedia Commons.

There really is no such thing as zombies, despite anything one might have seen on “The Walking Dead,” which is totally awesome, at least no zombie people. However, there is such a thing as a zombie bill, as there are a number of conditions under which inheriting debt is possible.

Inheriting debt is not what heirs likely want

Dealing with the death of a loved one is rough. Money matters relating to it are not pleasant to deal with. Worse still if the deceased passed debt on.

Inheriting debt can happen. Most people are generally concerned about inheriting credit card debt. For the most part, according to Daily Finance, credit card debt dies with the cardholder. The estate of the deceased may have to be liquidated to settle it, but after sale of any possessions or holdings, it may not satisfy the debt fully.

At that point, the credit card company is generally up a particular creek without a paddle – Google it and find out which creek – and writes it off. Don’t try to use it either. That, according to Bankrate, is fraud, which is a no-no.

The exceptions

However, inheriting debt can happen in some scenarios. If an heir is a joint holder of a credit card, such as a spouse, they are on the hook. The same applies if a person has co-signed for a credit card or other loans for the deceased.

Likewise, according to Bankrate, a person can also inherit credit card debt from joint credit cards, even with former spouses who kick the bucket. Typically an ex dying is cause for rejoicing, as death has put them out of your misery. However, if a divorce included an agreement to pay off jointly held debt and the dead party didn’t hold up their end, the living party is on the hook.

The same applies if a person co-signed for an installment loan, auto loan, credit card, whatever, for a dead former spouse.

Authorized users, however, are not liable for any debts, according to Fox Business. They can get in trouble if they use a credit card after the cardholder passes away, though.

Community unity

Another way inheriting debt can happen is through community property. One spouse can inherit a spouses’ debt after their death in community property states. There are ten, namely Texas, California, Alaska, Arizona, Idaho, Louisiana, Nevada, New Mexico, Wisconsin and Washington state. The laws vary by state, but mortgage, car loan, credit card and other debt can pass in this scenario.

Ordinarily, when settling an estate, assets aside from 401(k) accounts and life insurance, go to pay funeral expenses first, along with taxes and any administrative fees after the funeral and the settlement of the remains. After that, any assets held by the estate like houses, cars and so forth, often can be repossessed by the auto or mortgage lender to settle the debt in probate, or have a lien against them.

Some credit card companies will occasionally try to collect from people that aren’t liable. Report them immediately.


Daily Finance


Fox Business

Previous Article

« The basics of hyperinflation


Some people may have seen the word “hyperinflation” and are regaled with stories of doom, gloom and other bad economic tidings for the United States. Hyperinflation is basically regular inflation writ large and while technically a possibility, isn’t guaranteed to happen. What is this hyperinflation you speak of? A few might have [...]

Next Article

Consumer price index shows slowing inflation »

Gas prices are creeping up again, after being on the decline.

The U.S. Department of Labor’s recent consumer price index report was flat in January for the second month in a row. It is the most recent indication that inflation is leveling off in the United States. Consumer price index slows from last year On Thursday, Feb. 21, the Labor Department said that the [...]