Notifying Creditors After the Death of a Loved One

The passing of a loved one is often an emotionally challenging time as well as a stressful one. There’s a lot of planning to do and many loose ends to tie up. Unfortunately, many of these loose ends may be related to a person’s finances. Even in the event of death, some money may still be owed, depending on the type of debt, the size of the decedent’s estate, and in which state they lived.

When someone passes away, it’s important for the executor of their estate to notify creditors as soon as possible. Here are a few things you must do shortly after the death of a loved one to ensure their estate remains in good financial standing:

Identify an executor

If your loved one owned any type of assets, they likely had a will. A will usually names one person or a group of people as the executor of the estate. The executor is responsible for paying off any remaining bills in the deceased person’s name, and finalizing payments to any other creditors one way or another.

Send copies of the death certificate

Creditors and credit repair companies need proof that a person has actually passed away. In some cases, the obituary itself may serve as the notice of death to creditors. They will then have a certain amount of time to file for payment against the decedent’s estate, which may or may not have to be paid. Some creditors may require proof of death in the form of a death certificate, which is issued by local government authorities.

Check all accounts for other names

In cases of jointly-held accounts, such as joint credit cards or mortgages in the names of both spouses, the living person listed on the accounts may still be liable for outstanding debts. If the accounts are in the decedent’s name only, it is possible that the debt may be erased, depending on the type and the state in which the decedent lived. (Community property states may still hold spouses liable for certain debts accrued during a marriage.)

Notify the Social Security Administration

Though many funeral homes will take it upon themselves to notify the Social Security Administration (SSA) of death, some may not. Some people may also make different types of arrangements for their remains, forgoing the funeral home altogether. In these cases, the executor of the estate will need to notify the SSA of their loved one’s death. This is another way to help prevent identity theft.

Notify credit bureaus

Make sure to call one of the three major credit bureaus – Transunion, Equifax, and Experian – and tell them that your loved one has passed. If you share this information with one credit bureau, they will let the others know as well. They will then flag his or her name with a note not to issue any credit. This helps prevent identity theft of a deceased person – sadly, an all-too-common occurrence.

If possible, have difficult discussions about death and finances while your loved ones are still alive. This will help ensure that when your family member passes, these types of situations can be dealt with as quickly and efficiently as possible. For questions, or to learn more, please visit LexingtonLaw.com.

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