Are You Responsible For Your Loved One’s Unpaid Debt?
It’s never easy when someone dies. Grief is a powerful, and sometimes debilitating, experience that often leaves next of kin vulnerable. Unfortunately, there is a group that sometimes tries to take advantage of family members in mourning. No, they’re not scammers or confidence men. They’re debt collectors who try to persuade family members to accept responsibility for hospital bills, credit card balances, auto loans, and other debts incurred by the deceased even though family members have no legal obligation to pay.
People don’t always know when someone dies, their debts die with them. There are exceptions to this, particularly for spouses. If you live in a community property state, typically, spouses share property and debts equally. Non-spouse family members, however, have no obligation to pay outstanding debts of the deceased unless they have co-signed a debt agreement.
Regardless of these facts, debt collectors may contact you after the death of a loved one. The AARP Bulletin reported “debt collection agencies frequently employ specially trained representatives who make sympathetic calls to husbands, wives, children, and other family members to urge them ever-so-gently to pay what the loved one owed.” The Bulletin advised family members who receive these calls to hang up. There is an established procedure for collecting debts from a deceased person. It’s called probate, and it is the appropriate way for debt collectors to pursue collections after death.
After receiving numerous complaints about death-collections practices, the Federal Trade Commission (FTC) investigated the situation by listening to recordings of calls between collectors and mourners. The FTC determined that some debt collectors misled relatives into believing they had to pay the deceased’s debts. As government agencies are apt to do, the FTC issued new guidelines. Debt collectors should discuss a dead person’s debt only with the spouse or someone chosen by the estate to discuss the matter.
The next time you revise your will, you may want to designate someone to discuss any outstanding debts after your death. It could save your spouse some unnecessary heartache.
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