Are you responsible for the debt of your deceased spouse?

While it is difficult dealing with the loss of a spouse there are important financial ramifications to consider. Depending on how your finances were organized you might or might not be responsible for your spouse's debt.

It is always difficult when dealing with the loss of loved one. Unfortunately, people often must deal with financial as well as the emotional fallout. Family members might not think about how a death affects their credit but it often does. One challenge is determining whether you’re responsible for your deceased spouse’s debt. Michigan State University Extension wants to ensure people understand how a surviving spouse is connected to the deceased family member’s credit lines.

So what do you do first? To begin, contact each of the three credit bureaus to let them know that your spouse is no longer living. The Social Security Administration provides periodic reports but it’s best to contact Experian, TransUnion and Equifax yourself to ensure they receive the information in a timely manner. Experian reports that when an update is made, the deceased spouse’s credit history will be flagged to show that he or she has passed away and his or her name will be removed from any preapproved credit offer mailing lists. Terry Clark-Jones, an MSU Extension educator, advises families to be proactive by calling 1-888-567-8688 to register the deceased’s name to be opted out from preapproved credit offers.

Requesting a copy of the credit report for you and your deceased spouse is another important step. This allows you to make a list of your joint or separate credit lines (credit cards, loans, utilities, cell phones, home equity lines of credit, etc.). Be sure to clearly determine whose name is associated with these accounts. This means you need to know if they are individual accounts, joint accounts or if you or your deceased spouse was listed as an “authorized user” on any accounts. Then contact the appropriate creditors to notify them of your spouse’s death. They will likely need copies of the death certificate and the estate’s contact information.

As Michigan is not a community property state, if a loan or credit card was held only in the name of the deceased spouse, the surviving spouse is not responsible for the debt. In addition, if you are listed as an authorized user or second account holder on the accounts of the deceased, you are not responsible for those debts.

If accounts were listed as “joint” then you are responsible for the balances. If this is the case, it is very important to pay your bills on time, every time. Even one late payment can affect your credit score. The Federal Trade Commission reports that by law, a creditor cannot automatically close a joint account or change the terms because of the death of a spouse. Generally, the creditor will ask the survivor to file a new credit application in his or her own name. After reviewing the new information, the creditor will decide to either continue to extend credit or change the credit limit.