Debt Free Destiny

Just when you seem to be recovering from a death of a loved one, a collection agency comes calling. One of the fastest growing sectors in the debt collecting market is collecting from the deceased. Some debt collectors even specialize in contacting next of kin and demanding they ‘pay-up’. With increasing database technology, collectors have access to the country’s probate courts. If there is no estate however, a personal visit may be necessary.

It seems odd that even though they often have no legal obligation to assume the debt but the sibling or parent often takes the responsibility to make good on it. Laws regarding paying debts of the deceased varies from state to state but generally survivors are not required to pay a dead relatives bills with their own money. The collectors, in theory, can request payment from any property or cash that has been inherited from the estate.

Some think that collecting on a deceased person’s debt is reprehensible and violates the Fair Debt Collection Practices Act, which states that collectors not use misleading statements or misrepresentations when collecting. These collectors are seen to prey on people who are grieving for family members and are vulnerable. Companies specializing in deceased collections use tactics like offering free grief counseling in hopes of developing a relationship with the family member who holds the purse strings in hopes of getting the bereaved to ‘pony up’ with the cash.

Sometimes family members are on the hook for bills of the deceased. If you have co-signed for a loan or car payment, you have agreed to accept responsibility for unpaid bills. This is why banks require borrowers to purchase mortgage insurance. Owing for unpaid credit card bills is another story and is seen as manipulating a person who is vulnerable.

Retirement communities and seniors complexes also stand to make some money. Their rental agreements often have a ’30 day notice’ clause which requires a person to provide management 30 days written notice of their intention to vacate the property. However, in some cases, when a person dies, the management will maintain the person was in violation of the clause and bill family members for an additional 30 days of rent. In one instance the children of the deceased refused to pay the 30 days rent and were denied the security deposit and were told to expect a call from a collection agency. Although seniors in complexes do not move regularly, it seems like a relatively benign clause. It does, however, work in favor of the corporation because seniors have a high incidence of ‘moving’ to nursing homes, hospitals or funeral parlors.

If you are in a situation where debt collectors are contacting you regarding past due bills of the departed, be sure to contact your attorney or the persons handling the estate to find out what exactly you are responsible for paying and what rights you have.