Are you responsible to pay debts after death, or to pay debts after disability of your spouse? You might think so if you listen to the bill collectors! I have seen two different people wrestle with this problem from different angles.
The first involved a widow. Her husband left her very little insurance after his premature death. She used the insurance to pay for the funeral. The next thing she did was to use the remaining insurance money to pay off all of the credit cards, and other debts after death of a spouse. After all that is what the bill collectors on the telephone told her she should do to “preserve his good name.” She loved him deeply and wanted the world to think of him just like she did. Even in death. Now she is unemployed. Her benefits have run out. She has no money. Not even that her husband planned for her to have.
The second involves a woman who might as well be a widow. Her Husband had a tragic accident. Fell and broke a hip. At the hospital he developed dementia. He is now in a nursing home. The hip is OK. Mental state is not. The dementia has progressed. Soon he will be permanently confined to a nursing home. When that starts the social security will go to the nursing home. He has bills in his name. At the suggestion of the bill collectors, she has been taking his social security money and sending it all to them. What nice people! How will she pay the debts after disability of her spouse with the social security payments reduced?
Each of these women consulted with me for a chapter 7 bankruptcy at the suggestion of family and friends. If they clear up their own debts they will each be able to get by on what little they will have coming in. But what about the debts after the death or disability of a spouse? The simple and sad fact is that if the debt is in the name of the deceased spouse only or in the name of the disabled spouse only, the survivor, or insurance beneficiary has no responsibility to pay it. The life insurance money, or the money remaining is for you. It is not for the bill collectors, or you spouse’s credit cards or other bills. Don’t be tricked by telephone bill collectors. They do not care about you spouse’s good name like you do.
The woman who paid the debt after the death of her spouse now laughs to herself, “I have no job, no income, no money and no credit. I paid all his bills. He has excellent credit. He’s dead and doesn’t need it.”