The Wall Street Journal is reporting that new Federal Trade Commission (FTC) proposals addressing debt collectors attempting to collect on debts of deceased borrowers may backfire by allowing debt collection agencies to pursue surviving relatives and associates of deceased debtors. Here’s what you need to know.
Consumer Debt Collection Practices: Survivors not responsible for deceased’s debts
Debt collectors have harassed bereaved families by sending collection notices indicating that the surviving family or executor “must” pay the deceased borrowers credit card bills and other debts. Unless you’ve co-signed for a credit card or loan held by the decedent, you’re not under any obligation to pay. Laws governing debt collection can vary from state to state, so it’s a good idea to seek legal advice if you’re being hounded by debt collectors.
Under the FTC proposal, debt collectors would have to identify the responsible party (if any) before attempting to collect debts of deceased individuals. In many cases, no one may be legally responsible for a deceased person’s debts. Don’t be pressured into paying debts that are not your own. The FTC proposal would require debt collectors to inform survivors that they are not obligated to repay a deceased borrower’s debts. Consumer advocates are concerned that the FTC proposal does not provide for legal action or other sanctions against debt collectors that “step over the line” in attempting to collect debts incurred by deceased borrowers.
FTC: 119,000 complaints filed against debt collectors in 2009
Debt collection practices are the major cause of consumer complaints to the FTC. In her Consumer Confidential blog, financial writer Jennifer Waters, clarifies the rights and responsibilities of surviving family members.
A decedent’s estate is responsible for paying off debts, not surviving family members (Credit accounts held jointly may be an exception; seek legal counsel in your state.)
Notify creditors that they may not contact you regarding debts not your own. Write to the company, and if collection efforts continue, file a complaint with the FTC. This can protect you against litigation filed by the decedent’s creditors.
You have the right to inform debt collectors not to contact you at work. You can also file a grievance with the FTC if debt collectors disregard your request not to contact you at work.
Consumers needing help with their own credit card debt consolidation and debt management can find low interest debt consolidation solutions through credit card counseling and debt consolidation programs. Please seek debt help or legal advice if you’re having problems with debt collectors or paying your bills.
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.