Dealing with creditors after a spouse’s death may seem a daunting task but it is one that should be undertaken as quickly as possible. If there is no estate executor handling the financial affairs then a family member or the surviving spouse will need to contact the deceased’s creditors.
Researching the Deceased’s Financial Affairs
One of the first steps when dealing with creditors after a spouse’s death will be to obtain all of the deceased’s financial records. Where creditors are concerned this will mean obtaining details such as bank statements, credit card statements, loan contracts and other credit agreements. These statements will give the creditor contact details and the balances due on the accounts. First contact with creditors can be made by telephone in order to receive exact details of the department that will deal with this situation.
Always Check Statements for Payment Protection
Always check the financial statements for insurance coverage. Insurance on agreements such as loans and credit cards should provide coverage for account balances in the event of death. If there is insurance and it does cover the contract holder’s death then these balances should automatically be cleared by the creditor. If contacting the creditor by telephone always ask whether insurance coverage was taken out in the original credit agreement. Remember, lapsed insurance coverage even by one missed payment may mean that the insurance provision will not apply.
Joint Credit Agreements
Joint credit agreements can cause financial headaches when a spouse dies. If the financial agreement was co-signed by a spouse or partner it will usually mean that the surviving spouse will be held liable for the deceased’s debts. In certain circumstances creditors can actually request the sale of the family home to pay these debts if the debts are large enough and the creditor decides to pursue them. Surviving spouses may also be held liable if they have acted as a guarantor or second credit account holder with the deceased.
Writing to Creditors When a Spouse Dies
Letters should be sent to creditors as soon as possible after the death of a spouse. The letter should inform the creditors of the spouse’s death and should include a copy of the death certificate. Many credit companies will ask for an original death certificate. Copies of the original can be obtained from the registrar’s office and will be officially stamped. There will be a fee payable to the registrar for each copy obtained. Always keep copies of all letters sent to creditors.
Contacting Creditors As Soon As Possible
By contacting creditors without delay the credit accounts can be frozen and the creditors can begin dealing with the case immediately. If no payment protection insurance was in place and the credit agreements were not co-signed then these debts will usually be cleared by the creditors. However, it may still be the case that creditors will pursue these debts if the deceased owns property with the surviving spouse. This course of action will depend on whether or not the property was bought as ‘tenants in common’ or as joint tenants. If creditors are going to pursue via property sale then legal advice should be taken.
Creditors and Harassment
It has been known that creditors will still demand payment even after they have been informed of the spouse’s death. If this does occur then it can be classed as harassment and legal action can be taken. Credit agreements are not a high priority when it comes to paying debts from a deceased’s estate. In fact creditors such as credit card and loans lenders are usually the last to be paid from the deceased’s estate. If there is no money left after priority debts have been paid from the estate then it is unlikely that creditors such as credit card accounts will be paid.
Where to Find Help with a Deceased’s Creditors
Help with dealing with creditors in the event of a spouse’s death can be found from agencies such as the Citizens Advice Bureau. This agency can contact creditors on behalf of the surviving spouse. They will also be able to provide further information and advice on matters such as help with joint credit agreements. Surviving spouses who are struggling financially after the death of a spouse should contact the Citizens Advice, the Consumer Credit Counselling Service, and the National Debtline.
Most creditors will try their best to be efficient and helpful in the event of a spouse’s death. It is in the surviving spouse’s best interests to begin dealing with creditors as soon as possible. Interest can be frozen immediately on credit accounts, usually as soon as a death certificate has been received by the creditors.