Hello, and welcome to Your Money 2.0. I’m
Thomas Fox, Community Outreach Director at Cambridge Credit Counseling. When my father
passed away, it was a difficult time for our entire family. His was actually the second
death we had experienced in a matter of weeks, doubling the emotional toll on all of us.
We managed to make all of the necessary arrangements, but we were numb. However, I can vividly recall
the collection calls we began to receive just a week after my father’s passing. Our family
went from grieving to frantic as debt collectors began telling us we were responsible for my
dad’s debts. Thankfully, we had a good attorney, and he was able to explain our family’s
actual legal obligations in relation to my father’s bills.
Years have passed and, seemingly, not much has changed in regard to the collection practices
related to deceased individuals. Obviously, because of my own experience, I am extremely
empathetic toward individuals who have to deal with aggressive debt collection practices
following the death of a loved one. Thankfully, I’m not the only one who thought things
needed to change. The Federal Trade Commission recently reviewed thousands of phone calls
between debt collectors and the families of deceased debtors and didn’t care for much
of what they heard. According to the FTC, many debt collectors
skimmed obituaries and began cold-calling relatives to determine whether or not they
were handling their loved one’s affairs. The responses from family members helped collectors
gauge whether or not they would continue to contact the individual to recover the decedent’s
financial obligation. Even more disturbing was that some collectors implied that family
members had a moral obligation to pay these debts, and they routinely asked for voluntary
payment to satisfy an outstanding balance. Needless to say, the period following the
death of a loved one is a very vulnerable time. Disbelief, confusion and shock can easily
lead to responses that might place a completely unnecessary financial burden on mourners.
Based on its findings, the Federal Trade Commission has released new guidelines for debt collectors
who contact the family of decedents; however, before we review them I’d like to provide
some context in regard to the legal obligation of loved ones in these situations. First,
as I’m sure you know, I’m not an attorney; therefore, you should always verify information
with your legal representative before dealing with bill collectors. Also, please bear in
mind that collection laws vary from state to state and rely, to some extent, on how
the deceased established his or her end-of-life financial affairs.
Generally speaking, family members are not required to satisfy the debts of deceased
family members unless they cosigned for the debt. Also, if the deceased person’s will
enters probate, debt collectors can attempt to satisfy their claim against the assets
of the estate. Therefore, if you are contacted by a bill collector, the only information
you should give them is the name of the individual who is overseeing the decedent’s will.
The FTC’s new guidelines offer a measure of protection to those people contacted by
bill collectors in the aftermath of a loved one’s death. Going forward, debt collectors
may only communicate with the decedent’s spouse, parent, guardian, or the estate executive
or administrator. Debt collectors are allowed to communicate with family members and others
to locate the aforementioned individual. Debt collectors are prohibited from misleading
individuals into believing that they have an obligation to pay debts when they do not.
To help facilitate transparency, the Federal Trade Commission requires that debt collectors
specifically mention that repayment must come from the decedent’s estate, and that the
individual being contacted is not required to pay the debt, when that is the case. In
fact, debt collectors are not even allowed to use the word “debts” when contacting
individuals. Instead, the FTC prefers that collectors say they are attempting to discuss
payment of a deceased person’s bills. Finally, collectors may not contact family members
or friends at unusual times or inconvenient places; however, they are not required to
exercise a cooling off period after a debtor’s passing.
If you’re contacted by a debt collector after the death of a loved one and are unsure
about how to answer their questions, the best practice is to keep the conversation short.
You are under no obligation to answer their questions, unless you are the party responsible
for managing the estate. Until next time, I’m Thomas Fox for Cambridge Credit Counseling.