Debt after Spouse Death

[DallasHorn26 586]

I'm asking for a friend.  A couple I know, (mid 50s) thinks the wife doesn't have much longer to live (f cancer).  She has some credit card debt and wondering if husband would be liable for this if worst comes to worse.  My research on this seems spotty as Texas is a mutual property state.  They don't have a lot of assets, they have a home that is still mortgaged and 2 cars that are financed.  Not much cash in savings and no sort of life insurance policy.  I know there a few attorneys here that may have some input, just seeing what I can find out.

[bernorange 8366]

https://pocketsense.com/texas-law-paying-deceaseds-debt-7151.html

[Gene Parmesan 4015]

For sure if he's also on the credit card accounts.

[DallasHorn26 586]

For sure if he's also on the credit card accounts.

Hes not on the credit cards. They both have accounts in their own names.

[Bernard 879]

He's liable for her debts, but if there's not much in the way of liquid assets, BK is always and option to make the unsecured debts (credit cards, medical bills, etc.) go away. 

Bernard

[TwiceHorn 31539]

Strictly speaking, the debt is probably community debt (incurred for expenses that benefitted the community) and in any event her estate is liable for it.  However, the homestead retains its homestead character (exempt from non-mortgage claims), and cars tend to be valued net of any loan, so, practically speaking, it doesn't sound like there are a load of assets for the CC card company to tap.

However, this is governed more by practicality, in my observation, than the finer points of community property and probate and estate law.  At some point, the CC company will learn of her death (whether surviving spouse informs them, or not), and will close the account and possibly make a claim against the estate.  They can't just sue him outright, unless his name is on the card/account.  At minimum they must sue the estate, which means making a claim in the probate court.  He can be joined to the suit if liable.  All of this is a hassle and makes the CC company amenable to settlement.

Example, we used a credit card to pay some of my Dad's expenses.  It had a balance of something like $800 at his death.  I paid it online, routinely.  After his death, I went to pay it online and the account was closed.  I called and was referred to probate collections.  I just wanted to know where to send a check.  They offered, before I could even get finished talking, to settle the account for half.  The more money owed, probably the less likely it is they will settle, without some proof of destitution.

If you go through probate, you must file an inventory and appraisement, which lists the assets subject to probate, which looks like it's going to show about bupkis.  That would seem a prime time to settle for pennies on the dollar, even if it's a fairly large balance.

There should not be a need to file a bankruptcy.  In many respects, a probate acts as a bankruptcy for an in- or minimally solvent estate.

Edited August 23, 2018 by TwiceHorn