At first, it’s jarring, then maybe you become sad, or even angry. It’s a bill collector and they’re calling about your late kin’s outstanding debt. Here’s what you need to know when dealing with the debts of deceased relatives.
Aren’t Debts Voided When the Debtor Dies?
Would that that were the case. Debts hang around, even when the debtor is gone. But legally, the family is not on the hook – most times. More on that in a minute. The debts are usually to be paid from the deceased individual’s estate. If there’s no money to pay the debt, well, that’s usually it for that.
Note that there are situations in which the family IS liable: if you or a family member co-signed a loan or similar, or if you were married to the deceased individual and reside in a community property state.
Also, you may be responsible if the deceased debtor was your spouse, and your state of residence mandates that you satisfy specific types of debt, such as medical bills. Or, if it was your job – legally – to handle the estate and you flouted, or just didn’t follow, some laws.
Discuss the situation with an attorney if you’re confused or unsure about responsibility here. And if you do find that you’re personally liable and can’t afford to pay due to credit card obligations, check out credit card debt relief programs.
Who Handles the Estate?
The person named in the will as executor is responsible for acting on the deceased person’s stated wishes. Absent a will, the court may appoint a person to handle the estate. Sometimes, state law will dictate the process by which someone can represent the estate.
Do I Have to Speak with the Debt Collector?
The Fair Debt Collection Practices Act states that collectors can reach out to and go over delinquencies with the deceased individual’s husband or wife; parents, if the deceased was under age 18; or administrator, executor, or guardian. If there’s someone else who is empowered to pay the deceased person’s debts, the collector may legally contact him or her. But that’s it. There’s no one else the collector can discuss the deceased person’s financial affairs with.
What Can the Collector Speak to the Family About?
Debt collectors are allowed to contact other kin or individuals linked to the deceased loved one but who don’t have the authority to pay estate debts. However, they can only do so one time, and that is to get contact information for the deceased person’s spouse, executor or other person who has the power to pay. Also, collectors may not discuss debt details.
Can I Legally Tell a Collector to Cease Contacting Me?
The law says you can, absolutely. But you need to put it in writing and send the letter via certified mail, keeping a copy for your records. After that, the collection agency is only permitted to contact you to confirm request receipt, or to tell you it plans to sue you or some such.
Note that the debt does not disappear, and the collector may still attempt to collect the debt from the estate or someone else as described earlier.
So, that’s what you need to know about dealing the debts of deceased relatives. Peace of mind is priceless, particularly during a period of bereavement. You may want to keep this info handy for if, and when, the time comes.