Mourning the passing of a loved one is draining. Processing the loss takes time, but it’s not wise to delay managing the affairs of the deceased individual. Of paramount concern is their finances, and primarily their credit information.
Time is of the essence, and by taking prudent action you can save yourself needless heartache.
What happens to your credit report when you die?
When a person dies, it’s necessary that a spouse or executor of the individual’s estate contact the three main credit reporting agencies – Equifax, Experian, and TransUnion. Doing so puts a notification on the credit file of the person that they’re deceased. This is important to protect against fraudulent activity.
Depending on where you live, private information is publicly available on death certificates. According to Teri Williams, president and chief operating officer of OneUnitedBank, “In some states, the deceased person’s Social Security number is included on the death certificate. Fraudsters have used death certificates to apply for loans under a deceased person’s name. Therefore, it’s important to immediately report the death of a loved one to credit reporting agencies.”
Credit reporting bureaus aren’t typically notified automatically when you die. Prompt notification is essential to curb fraud or identity theft. Additionally, agencies won’t close out your credit report for at least seven years after the notification is placed on your report.
Calling the respective credit reporting agencies isn’t sufficient to put a deceased alert on your credit report. All three agencies direct individuals to send a letter with the necessary information to inform them of the passing.
Notifying one of the credit bureaus is sufficient, as the one you contact will notify the remaining ones. However, if you want additional peace of mind, you can send letters to all three agencies. The letter should include the following information:
- Copy of the death certificate
- Legal name
- Social Security number
- Date of birth
- Date of death
Additionally, you want to include your name, mailing address, and a copy of a government-issued photo I.D. Moreover, TransUnion recommends that if you’re someone other than the spouse of the deceased, such as the executor, you will need to include a copy of the will, executor agreement, or Power of Attorney paperwork. The other two agencies have similar requirements.
These are the proper addresses to inform the credit reporting agencies of a passing:
Equifax Information Services LLC
P.O. Box 105139
Atlanta, GA 30348-5139
Experian
P.O. Box 4500
Allen, TX 75013
TransUnion
P.O. Box 2000
Chester, PA 19016
It’s also wise to request a copy of the credit report from all three agencies for the deceased person. Having these can be particularly helpful as you gather information so you can get an idea of what was going on with the person’s credit, especially if you’re not the spouse of the individual.
What happens to debt after passing?
Debt doesn’t go away just because you die. In some cases, you might inherit the debt of a loved one. This is particularly the case if you’re the spouse and held a joint account, such as a mortgage or car loan.
Williams notes, “Debts are not forgiven when someone passes away. The debts are owed by the estate. If the debt is a mortgage, for example, the lender will expect to be paid by the estate or can foreclose.”
According to the Consumer Financial Protection Bureau, these are the following instances where you may be responsible for someone else’s debt:
- You’re a co-signer on a loan with outstanding debt
- You’re a joint account holder on a credit card
- You live in a community property state
- The state you reside in requires spouses to repay certain debts
- The state you live in requires executors to pay outstanding bills of a property that was jointly-held
If you’re uncertain as to what happens to a credit card when someone dies, the answer is a bit less clear. The issuing bank can go after the estate to make itself whole.
However, the executor has little obligation to pay, especially if they’re not on the account. In that case, the bank may choose to write off the debt. The bank can’t go after life insurance proceeds, and if the estate is insolvent, there’s little the bank can do since the debt is unsecured.
How to manage the finances of a deceased individual
Stepping into the financial life of a deceased loved one can be overwhelming, particularly if you didn’t live with them or you had no idea how they managed their finances. After you contact the credit reporting agencies, it’s important to begin dealing with the rest of their financial life.
Accessing the will is of first importance. Williams lists that as one thing all people should have before passing. “The best step is for everyone to have a will, power of attorney, and health proxy while living to provide direction on their wishes if they are sick or when they pass away,” he says. Unfortunately, not everyone has a will, which can result in your estate being handled by the probate court.
Once you have the will, contact all service providers to inform them of the passing. This avoids additional charges and lets you know what the estate must repay. Closely tied to this is opening an estate bank account to manage the financial affairs of the estate. Finally, you must file a last tax return for the deceased person.
Closing an estate can take months if not years. Keeping all of the financial affairs of your loved one organized helps ensure you keep everything straight. Dealing with the loss of a loved one is difficult enough, and being organized can greatly help reduce stress.
The bottom line
Dealing with death is stressful. You may not want to handle things like speaking with credit agencies, but action is vital. Moving swiftly adds a deceased notification to your loved one’s credit report, greatly diminishing the impact fraudsters can have. If you held joint accounts with the individual who passed, this protects you against potential harm as well.
