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Inheriting mom's credit card
debt
Dear Money Matters,
When my mother died, I found all this
credit card debt. She had a life insurance policy for $6,000. She
owned no cars or property. Can the credit card companies come after
this money?
Amy
Dear Amy,
The answer depends on how your mother structured the payout
on the policy.
If your mother left the money from her life insurance
to you as the beneficiary, then the company has no legal access
to the money. It's yours free and clear.
On the other hand, if your mother named her estate
as the beneficiary, then the credit card company does, in fact,
have a legal right to make a claim for what it's owed.
You can see that the issue boils down to ownership
of the insurance policy proceeds. If it's a part of your mom's estate,
from a legal standpoint it's as though the money is still hers,
even though she's passed on. Again, though, that point is moot if
she named you as the beneficiary, since the money is technically
now yours and not a part of your mom's estate.
However, you may still have some leeway if, in fact,
the life insurance proceeds went into your mother's estate. If money
is tight, you can always approach the credit card company and see
if they might be willing to settle for a portion of what your mother
owed them.
Try offering half or, if you want to be more aggressive,
say you'll give them one-fourth of what your mom owed. Granted,
the company may insist on holding out for the full amount, but many
firms won't want to go to the hassle of legal steps to secure what
they're owed.
Put another way, they may be happy with less money
but fewer headaches along the way, so it never hurts to find out
how receptive they might be.
-- Posted: March 13, 2002
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