Debt Collection After Death
Some debt collection agencies have started harassing families of debtors that have passed away in an effort to collect unpaid debt, despite families not being responsible for unpaid debt.

December 24, 2011 /24-7PressRelease/ -- Debt Collection After Death

Dealing with the death of a loved one can be a heartbreaking experience. Often, trying to sort out the financial affairs of a deceased family member can be an overwhelming task. When the deceased was deeply in debt, the matter can become even more complicated. In most cases, relatives are not required to pay a deceased person's debts. However, some collection agencies are betting that people do not know that and are targeting and harassing the families of debtors after the debtors pass on in an effort to collect on debts.

No "Inheriting Debt"

If a person incurs debt in his or her name alone, when he or she dies, the executor of that person's estate is supposed to use any assets that the debtor left behind to pay off creditors first, then distribute the remaining assets in accordance with the terms of the debtor's will. If the debtor dies without leaving sufficient funds to repay all of his or her creditors, the creditors must write off the debt as a loss.

The surviving family members are under no obligation to pay the debt, unless they co-signed for the debt and assumed responsibility, such as when spouses take out a mortgage or auto loan together or a parent co-signs for student loans for a child.

Targeting Surviving Family

Despite the fact that surviving relatives have no legal obligation to pay for the debts of deceased loved ones, many collections agencies have teamed with some of the larger lenders such as Bank of America, Capital One Financial, Discover Financial, Citigroup, Wells Fargo & Co. and J.P. Mogan Chase to pursue deceased debtors' families to try to recoup at least some of the money that debtors owe. By outsourcing the collections on deceased accounts, these lenders do not have to tarnish their reputations by seeming to go after dead people's families but they still get their money.

Collection companies train employees to use psychological techniques to get family members to pay the deceased's debts. They send condolence letters that are also collection letters and begin phone calls by empathizing with the person for his or her loss and then transition into trying to persuade the family member to make a "morality payment" on the debt.

Growing Practice

The practice seems to be on the rise. The Federal Trade Commission received so many complaints about debt collectors contacting family members of deceased debtors that it investigated the industry. The FTC issued new guidelines for collection agencies in July 2011, but those guidelines do not prevent collection agencies from calling family members of deceased debtors.

Contact an Attorney

If you are being harassed by creditors about a debt, do not hesitate to contact an experienced attorney who can discuss your situation with you and advise you of your options.

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