How to Deal with Debts of the Deceased

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.


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