Credit cards and loans have become an integral part of our lives and more and more people are giving in to the temptation of 'buy now pay later' schemes. |
Credit card customers could be among the forgotten casualties of the credit crunch according to Fool.co.uk. Although there is constant speculation over mortgage rate changes when the Bank of England base rate, credit card rates are very rarely touched upon. |
Abbey's new Zero credit card charges no fees for balance transfers, foreign exchange or cash advances, and offers zero per cent interest on purchases for six months. |
Saga has launched a new credit card which it claims to be one of the fairest on the market because it clears the most expensive debt first. |
More than 3.24 million credit card applicants have been rejected in the past six months, providing further evidence that the UK's love affair with credit has come to a painful end for consumers who are struggling to make ends meet in the current financial climate of rising food prices and energy costs. |
The amount that credit card and store card customers are charged when they default on a payment is to be reduced as a result of action taken by the Office of Fair Trading. |
I have a terminal illness. I have significant credit card debt. I have no significant assets, except my paid-off house. My husband preceded me in death. As you might imagine, I have a lot of things on my mind. One of them is maximizing what I pass along to my children. Should I just ignore my credit card debt? It's supposed to be unsecured, so they can't come after my house, right? Seems to me I'd have more to pass along to my children. I am so sorry to hear of your illness. I hope you have plenty of time to get your affairs in order. There really are two questions that you pose. The first is what to do about your credit card debt. The second is that you want to pass as much to your heirs as possible. The two are connected. |
Let's start with your credit card debt. Since your husband died, is it safe to assume that you are the only person listed on the credit cards? This is important. If there are joint owners for your credit cards, then the other owners not only share in the credit offering for these cards, but they also share in the responsibility to pay off the debt as it is incurred, and after you are gone. If there are no other owners for these cards, then the debt is your responsibility. It is true that the debt is unsecured as you stated. This means that you did not put up any assets for the loans/credit offered to you by your credit card holding companies. But this does not wipe the debt from the books upon death. |
Upon passing, any debt in your name is now in the name of your estate. The personal representative of your estate (the executor or executrix) is responsible for settling any debts of your estate before distributing assets. I have encountered situations where people had been distributed assets from an estate and then asked to return them to the executrix of the estate to pay off a debt. This is not always easy to do, so it is best to get those debts paid first. So the answer to your first question is to continue to pay on the credit card debt as best you can. If you can afford to accelerate payments, then less interest will be due on the credit card debt. The lower your debt, the greater the estate that will pass to your heirs. Your estate will be distributed by this simple formula: Estate passed = Assets in estate minus Liabilities of the estate. |
Which brings us to part two of your question: What is the best way to get these assets to your beneficiaries? In order to expedite the process of getting assets to your beneficiaries, there are some steps you can take today. You state that you have no significant assets other than your house. Step one is to clearly document who gets what upon your passing. Take out a pen and paper and write this down. Make sure you have listed out all of your assets. Take a hard look at any assets that have a beneficiary designation (life insurance, annuities, IRAs, etc.). Make sure these assets will pass to your designated beneficiaries. This may mean updating any beneficiary designations on account paperwork with your bank, brokerage firm and insurance companies. |
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