Debts, the Deceased, and Debt Collectors Calling Family Members

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The Fair Debt Collection Practices Act (FDPCA) regulates how debt collectors can act when they are collecting debts from consumers.

A rapidly developing area of debt collection is collecting debts of a deceased individual.

This frequently leads to debt collectors contacting a consumer’s family and friends. If you are being contacted, it’s important to understand your rights against debt collectors.

It is unlikely that you are responsible for a loved one’s debt

When a loved one or relative passes away, debt collectors may contact the surviving spouse or family members. The combination of grief and/or potentially misleading statements from the debt collector leads many family members to believe that they are responsible for their loved or relative’s debt. Most of the time, however, they have no personal responsibility to pay that debt.

In general, consumers are not liable for another consumer’s debt. There are plenty of exceptions to that, but the general rule of thumb is that a consumer is not liable for another consumer’s debt. If it was a joint debt, there may be liability. For example, if it was a joint credit card account (note: not multiple authorized users, but more than one co-signer). In many states, spouses are liable for each other’s medical debts (like here in Minnesota).

As a starting point, like any other debt, ask for clarification if you are contacted. Who is calling? Who are they trying to contact? What are they calling about?

It’s never a good idea to automatically pay someone that is asking for money. And if you are dealing with the loss of someone close to you, you are probably more vulnerable than usual. So start with the basics: who, what, why. If you are unsure whether you have any personal liability, contact an attorney immediately.

Who debt collectors can contact

Under the Fair Debt Collection Practices Act (FDCPA), debt collectors can contact third parties in an attempt to gain contact information for the consumer that allegedly owes the debt. However, the FDCPA prohibits revealing a consumer’s debt to third parties.

When a debt collector is trying to collect on a debt from a deceased individual, they are allowed to talk with the executor of the will (or personal representative). They can discuss the debt with an individual that has authority to pay debts from the assets of the deceased individual’s estate.

It can be difficult to locate those individuals. As a result, the FTC has issued a policy statement that gives debt collectors more leeway when trying to locate the individual with authority to pay any alleged debts of a deceased relative. Debt collectors can say collector they are seeking to identify and locate the person who has the authority to pay any outstanding bills of the decedent out of the decedent’s estate. That said, they cannot reveal any specific information about the debts, including whether the alleged debts are delinquent.

It’s also important to know what information debt collectors are allowed to get from third parties. They can only request the name, address, and telephone number of the deceased person’s spouse, executor, administrator, or other person authorized to pay the deceased consumer’s debts.

Potentially misleading or harassing topics

The FDCPA prohibits debt collectors from contacting consumers at “any unusual time or place or at a time or place known or which should be known to be inconvenient to the consumer.” That could certainly include the period after a loved one or relative has passed away. As a result, calls from a debt collector immediately after the loss of loved one or relative could be construed as violating that provision of the FDCPA. Especially if you have explained to a debt collector what you are going through.

Debt collectors have to be extremely careful about misleading consumers about personal liability for another consumer’s alleged debt. As explained above, consumers are generally not liable for another individual’s debt. A deceased individual’s estate may need to pay all or part of an alleged debt, but the liability is generally limited to the deceased individual’s estate. It generally does not extend beyond that (again, there are exceptions to this and you should absolutely consult with an attorney if you have questions). For example, if an individual’s estate does not have sufficient funds to cover an alleged debt, a debt collector cannot mislead a consumer (typically the executor or personal representative) into believing they must personally cover the remaining balance. Or if a debt collector starts asking detailed and repeated questions about jointly-held property that could not be used to satisfy the alleged debt.

It’s also important to remember that debt collectors are only allowed to contact third-parties once to obtain or confirm location information. If a debt collector calls a third party repeatedly, that can be a violation of the FDCPA.

The bottom line is that this area of the law can be fairly complicated. If you are receiving calls from a debt collector about a loved one’s debt, don’t hesitate to contact me.

(photo: http://www.flickr.com/photos/76657755@N04/7408506410/)