Credit Card Debt After Death-An enlightement

Possibility of being guilty of credit card debt after death.

In general, credit card debts after death are not the responsibility of any heirs but paying the debt 

of a relative who recently died might feel like a moral obligation.Most people are not aware of the fact that they are not indebted to credit card companies after the death of their relatives provided that they were only authorized users of the credit card. Sometimes creditors will call or send threatening letters demanding payment from family members after a relative dies. If you receive these calls, ignore the calls until you have found out that you are indeed responsible for the debt. Tell the collections agent to send you a copy of the original contract with your signature to prove that you are indeed indebted to them.

Ways of being guilty of credit card debt after death

1. Joint cardholders

If you are a joint card holder, it means that you co-signed for the credit card, you are liable for the debt. If you as a parent co-sign credit card with your child and the child dies , the parent will definitely pay the debt. Also, co-signing of credit card with your husband or wife will put one of the couples in trouble after the death of one of them. The only thing that can save you is to be an authorize user of the card and not a co-signer.

Better still, you must endeavor to check your status before death sets in because at times, you may not be aware that you are using a joint account. This you must be sure of in order to save your ass.

2. Using a credit card after death could cause trouble for you

As an authorized user, you will be playing with a serious trouble if you continue to make use of credit card after the death of the cardholder. This is a criminal offence because you know too well that the debt will not be paid. Also, if you know that a parent is near death and the estate is not enough to pay off the debt, the children will be committing fraud if they continue to use the card.

3. You are liable in a divorce

Divorce is sometimes such a complicated affair, that this can be frequently overlooked. The separation agreement may specify that the ex-spouse should pay the debt but if it is not done before death takes the ex-spouse, you could be responsible for the debt because the debt is still unpaid.

WHO THEN PAYS CREDIT CARD DEBT AFTER DEATH

1. Using the estate to pay off the debt

The debt of the deceased are the responsibility of the estate and are first deducted from the estate’s assets before being distributed based on priority. The beneficiaries of the estate sometimes lose everything especially when the debt is hefty.

2. Credit card company loses

In the case whereby the estate is not enough to pay off the debt, the credit card company will have to write off the debt. This implies that no member of the family is liable to pay the debt.

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Good luck!

 

Adverse Effects of Credit Card Debt

                                   Dangers of Hefty Credit Card Debt

It is now obvious that many people in America and other countries where credit cards are used to purchase goods and services have failed to consider the adverse effects of hefty credit card debt before dabbling with it until now that they are facing the consequences of their actions. Though one cannot really blame the consumers because in most cases, the credit card companies or banks tricked the consumers into accumulating such huge debt by offering the consumers bonus offers and lucrative offers of low interest rates that expire after a year. The depressing part of this is that creditors will start calling you a few days after your first missed payment. Most times, if you stop paying your credit card bill, the debt will be sold to a collection agency that will make life miserable for you by threatening you with legal action.

         

 Unfavorable Effects of Credit Card Debt

1 It affects marital relationships

Money is a huge stressor in the lives of the married. It causes couples to get angry, worried, and take money matters out on one another. In certain cases, overwhelming debt can even lead to divorce. On the other side, spouses who are financially unburdened are often much happier and the couples that pay off their debt together, often stay together.

2. It leads to health problems

Overwhelming credit card debt causes stress, and stress hurts our well being. Not only can stress make us care less about maintaining a healthy lifestyle, but it is also directly related to certain diseases. From the nuisance of a headache to a life threatening heart attack, from a compromised immune system to ridiculously high blood pressure, stress plays a role in so many illnesses.

3. Bad credit report and low credit score for most young people.

Most of the bonus and credit offers are targeted at young people who are not yet matured enough to understand the importance of having good credit score or even how to handle a credit card. This early lack of knowledge about credit cards brings about a future of financial chaos as well as jeopardizing the credit reputation of the consumers which will eventually restrict them from certain opportunities.

Credit card companies will definitely report payments that are above 30 days to the three credit bureaus which are Trans Union, Experian and Equifax. The companies will continue to report your late payment until they eventually “charge off” the account. Late payments and charge off credit card accounts will remain on your credit report.

4. It makes leasing of an apartment difficult

Most landlords now check your credit report before allowing you to sign a lease. They do this to prevent a delay in their subsequent payments. No landlord will like to lease an apartment to someone with bad credit report. This implies that your bad credit can make you to live on the street.

5. Employment denial

Certain industries require that you have a good credit record before you can be qualified to apply for their jobs. Believe me or not, debt can prevent you from getting a job. In addition to reviewing your resume, and checking your work history, many employers have started to check credit score. If yours is too low, your potential employer sees you as someone that is not responsible and he might change his mind about giving you the job.

6.It makes it difficult to obtain house and car loans

Banks will definitely check your credit card record before approving your application for house and car loans. If you have a bad credit, your application will not be given a favorable consideration because the risk of giving you the loan will be too high on them. At the other hand, maintaining a good credit record will make the banks to repose their confidence in you by granting you the loans.

Credit Card Debt Clinic Advise

If you are still suffering from a case of post holiday card bill guilt, you are not alone. While making good on your resolution to pay down your debt is a terrific goal, you want to make sure you do so in way that actually improves your overall financial status. In other words, think twice before resorting to these sketchy debt pay-off plans.

Americans are loaded with credit card debt. The average American household with at least one credit card has nearly $15,950 in credit card debt in 2012, according to credit cards.com, and the average interest runs in the mid- to high teens at any given time. Teens under the age of 18 cannot apply for a credit card without a parent’s co-signature, but according to school loan provider, Nellie Mae, more than 54 percent of college freshmen carry a credit card. Nellie Mae also reports that on average, freshmen bring an average of $1,585 in credit card debt to college.

Teens credit card statistics issued by the jumpstart coalition for personal financial literacy shows that one out of three high school seniors use credit cards. Half of these students have credit cards in their own names.

Credit Card Debt Statistics in America

Statistic Verification

Source: Federal Reserve, Joint Economic Committee, Sallie Mae, Trans Union

Date Verified: 7.24.2012

Credit Card Debt Statistics	Data
Total U.S. credit card debt	$793.1 Billion
Average credit card debt per household	$15,799
Average household debt	$54,000
Percent of consumers that carried an unpaid balance in the past 12 months	56%
Percent who said their debt had gotten "higher" in the past 12 months	26%
The average balance per open credit card	$1,157
Percent of disposable income that went to service credit card debt	13.9%
Percent of families whose debt exceeds 40% of their income	14.7%
Average credit card debt carried by undergraduate college students	$3,173
Alaska has the highest average cardholder debt of	$7,827
Percent of cardholders whose balance is less than $1,000	40%
Percent of cardholders whose balance is above $10,000	15%
Average combined credit card limit per consumer	$19,000
Average debt of a college graduate	$20,000
Percent of 18 to 24 year-olds who have "debt hardships"	20%
Percent of survey who believe they had the same or less debt than the average	90%
Miami has the highest percent of yearly income owed to credit debt	22.61%
Percent of college students who have credit cards	76%

5 ways not to pay off credit card debt

1. Dipping into retirement savings

This is when you tap retirement funds that don’t serve their long- time interest. In this case, you are paying yourself interest instead of the card company which seems like a great idea, but as long as your loan is there, you are losing out on the compound interest you could be earning.”The other unwise decision is to withdraw from your individual retirement account. The 10% penalty alone can end up costing more than any credit card interest.

2. Taking out a payday loan

Payday loans are essentially very high-interest loans that provide an advance on your paycheck.”After you pay the fees and interest rate, you will pay more than you would have if you just continued to pay the card off,” Long says. The better move is to make adjustment to your pay check. There are ways to alter how much income tax you pay on a short term basis.” says Paula Ryan, The author of “Bounce Back from Bankruptcy.” This will give you more disposable income to put toward paying off those holiday bills quickly.” In a similar vein, if you expect a tax refund, you could file your return early so you can get the money to pay off bills faster.

3. Paying off your cards without a plan

If you owe a balance on more than one account, choosing an amount each month and divvying it up equally among accounts is not advisable, Gahler says. The same goes for paying just the minimum amount due on your accounts.”It will be hard to get out of debt for the long term that way, ”he says. The better move is to focus on the card with the highest interest rate first.

“Prioritize based on interest rate”, Gahler says.”If you have got multiple lines of credit, focus on the highest interest rate first.” The idea is to pay as much as you can afford on that account, While maintaining on-time minimum payments on the others. The exception :”If you have a small balance that is easy to just pay off, sometimes even if the rate is lower, It’s a nice little victory to say, ”I have got card paid off,” Gahler says.

4. Transferring balances

Using balance transfers can be an effective way to pay off a debt using a lower rate card. The danger lies in the limited grace period. People often end up using new card for additional spending without paying off the original balance before the introductory period expires.” Not only do they transfer the old balances, but they accrue even more, ”Long says. Gahler also added that with every new account you open, your credit score will take a temporary hit.

The better move is to use transfers sparingly, and crunch the numbers first. Calculate exactly what it would cost you each month to pay the zero interest debt before the zero interest period is up,” says author Ryan. Then pay that amount each month so you get the use of the credit card for free and get the debt paid off in full. ”Plus, most balance transfer cards charge a 2% to 3% fee, so if you are transferring  a hefty balance, you will be adding more to your debt load.

5. Borrowing from family

Relatives are preferable to some other lenders, but there are still caveats. Even if a family member offers you a loan without interest, it can make for awkward encounters if you don’t pay it back in a timely manner.

The better move is to save for the holidays all year long. The holidays are going to come around again, so the best way to plan ahead in your budget is to set aside some money each month to be able to pay for holidays shopping,” Gahler says. That way, by the time next December and January roll around, you have funds to pay for your purchases.

 Ultimately, there isn’t a magic wand for getting out of debt, it is really a matter of buckling down.”Stop using credit, pick a fixed amount you can afford, and pay that amount or more every month until the debt is gone.

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