How to deal with deceased debt collections
Collecting debt upon the death of the debtor
Managing the debt of someone that has deceased and learning how debt collection works for that person can be a tough and confusing affair. Here's a breakdown of how the process works to better clarify for those dealing with the debts of someone that has died.
Some things are certain. Death is one of them.
Coping with the death of a family member is no walk in the park. Throw in a collector breathing down the neck of mourning relatives compelling them to pay the outstanding debts of the deceased and you have absolute mayhem!
Let’s discuss how relatives can navigate the contentious waters of deceased debt collections.
Debt collection and debt collectors
Debt collection is the process of pursuing and recovering debts owed by individuals or businesses. Debt collectors are persons or agencies in the business of collecting debts owed to others.
According to the Fair Debt Collection Practices Act (FDCPA), debt collectors include collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts in order to collect them.
What happens when a debtor dies?
Does the death of a debtor extinguish the debt they owe? As a general rule, no.
The deceased person’s estate owes the debt. This means that money from the dead person’s assets will be used to cover the debt.
Therefore, when the funds in the estate do not suffice to pay off the debt, it goes unpaid. This implies that a person, generally, isn’t liable for the debts of a deceased relative.
However, there are a few exceptions when a person can be held liable for the debts of a dead relative:
- The person who co-signed the deceased’s debt obligation is liable to pay the remainder.
- When the person is the deceased’s spouse, state law may mandate the spouse to pay off certain kinds of debt, such as healthcare expenses.
- The person is legally responsible for resolving the estate but failed to comply with the relevant state’s probate laws.
- If they deceased resided in a community property state such as Arizona, California, Idaho, Nevada, or Texas, their assets are divided amongst relatives and the state.
Dealing with the deceased’s estate
Upon a person’s demise, who can pay their debts using their assets?
The answer to this question depends on whether the deceased had a valid will in place before their passing.
When the deceased leaves a will in place, the person named in the will as the executor has the authority to pay the deceased’s debts using their remaining assets. The executor is whomever the deceased named in the will to settle their affairs after their death.
Where the deceased passes without a will in place, the court can appoint an administrator, a personal representative, or a universal successor. The court gives such persons the authority to settle the affairs of the deceased.
In certain instances, however, depending on the state, some other persons may even have this authority, even without the court’s formal appointment.
Discussing the debts of the deceased
Legally, a debt collector is not permitted to discuss the debts of a deceased with just anybody. According to the Fair Debt Collection Practices Act, the persons with whom a debt collector can discuss a deceased’s debts are:
- The deceased’s spouse
- Parent (or parents) of the deceased, if the deceased was a minor
- Guardian of the deceased
- The deceased’s executor, if the deceased had a valid will in place
- The deceased’s administrator, if the deceased died without a will
However, the Federal Trade Commission permits collectors to contact anyone who has the authority to pay the deceased’s debts from the deceased’s assets.
Other than the people mentioned, debt collectors are not permitted to discuss the debts of the deceased with anyone else.
There might be a need to obtain the name, address, phone number, or other relevant detail of the deceased’s spouse, executor, guardian, or other person authorized to pay the deceased’s debts. Where this is the case, collectors can contact relevant third parties or relatives for such information.
As a general rule, they can only contact such relatives only once. However, to every rule, there is an exception. For the collector to contact relevant third parties more than once, two elements must be present:
- The collector must reasonably believe that the details given were incomplete or wrong.
- Also, the collector must reasonably believe that the third party currently has complete and accurate details.
Regardless, collectors are still not permitted to discuss the details of the deceased’s debt with the relative. Additionally, they can not ask that relative for payment when calling to obtain relevant contact details.
Limits of the debt collector
The federal Fair Debt Collection Practices Act prohibits debt collectors from resorting to certain actions when attempting to procure the payment of a debt.
First, they are not permitted to twist the truth in any way to make you pay. Any false implication that you or a member of the family is legally bound to pay the deceased’s debts out of your pockets is prohibited.
Additionally, any form of harassment to compel you to pay the debt personally is illegal. As discussed above, there are circumstances where a relative is bound to personally pay the deceased’s debts. If you don’t fall within those circumstances, then you’re not financially responsible for the debts.
Your rights during debt disputes
As a relative of the deceased, you have your rights as far as the debt collection process goes. Your rights can be enforced when the debt is in dispute and when the collector’s calls are excessive.
It’s entirely possible that you’re convinced that you don’t owe a part of or all of the debt. Maybe, the debt entirely seems strange to you. If this is the case, you have the option to dispute the debt.
To commence the process of disputing the debt, you have to send the collector a letter disputing the debt. The letter must be as detail why you’re convinced the debt is incorrect. You must be careful to give very little personal details about yourself at the same time.
Once you receive the validation notice which states the amount owed and to whom it’s owed, it behooves you to send the dispute letter within 30 days.
Once the collector receives the dispute letter, they are bound to pump the brakes on contacting you. Mind you, this does not mean that the debt is extinguished. In fact, if the collector later sends you written verification of the debt, they can start contacting you once more.
Receiving too many calls from debt collectors
We are all entitled to our peace. That is a matter we can all agree on.
In the event that you grow weary of the incessant calls, the law gives you the right to stop the collector from contacting you. This right stands even if you are legally authorized and bound to pay the debt. However, to properly exercise this right, there is a process.
To begin, you have to send a letter to the collector stating that you don’t want them to contact you anymore. Take note: This must be a letter, as a mere phone call doesn’t fulfill the requirement.
Why? The original letter must be sent by certified mail. Subsequently, make a copy of the letter for your files. You also have to pay for a return receipt to document what the collector received and when.
The Consumer Financial Protection Bureau (CFPB) has some samples of letters and pointers on how to use them.
Upon the collector’s receipt of your letter, they cannot contact you again except to confirm that there will be no more contact or to notify you of the course of action that they or the credit plan to resort to. For example, they could file a lawsuit to recover the debt.
It is noteworthy that stopping collectors from contacting you does not absolve you from the debt as long as you are legally responsible.
Various states have their own debt collection laws, which differ significantly from the federal Fair Debt Collection Practices Act. At Consumer Attorneys, our experts have a strong grasp of the legal provisions in various jurisdictions.
Do you have any deceased debt collection issues? Are you facing unlawful debt collection harassment? These issues can be nerve-wracking. You don’t have to face them alone; we’re at your service! Let’s talk
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