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It can be extremely difficult to cope with the death of a family member or loved one, and managing their collection debts can make matters worse. It's critical to understand your legal obligations, rights, and what actions you can take to resolve the matter if you find yourself in this challenging circumstance.
Receiving calls from collection agencies requesting payment for your loved one's debts is the last thing you want to deal with when the unthinkable or the intolerable occurs, such as the death of a spouse, partner, parent, child, or sibling. Unfortunately, a lot of people go through this identical situation and are unaware of their legal obligations or their rights as consumers. Knowledge is power in these situations, and being aware of the debt collection procedure will help you get through this trying period with greater assurance and control.
Any debts accumulated during the marriage will be borne by the surviving spouse if the deceased was married and resided in one of the nine states that have community property. In some situations, the spouse is legally required to repay the debt, which can put a great deal of additional financial strain on an already difficult period. Family members must understand the rules in their state and how they may affect their financial obligations following the death of a loved one.
The collection agency will typically make a claim against the deceased's estate if they did not have a surviving spouse or lived in a state that does not allow communal property. The estate is in charge of using its available assets—such as real estate, money, or other investments—to settle the obligation. Family members and executors must be aware of their rights and obligations during this time, which can be a drawn-out and complex process.
Collection agencies may still get in touch with family members after learning of the debtor's passing to collect the debt, even though they might not be held legally liable for a parent, spouse, sibling, or child's debt upon their passing.
In most cases, the collection agency may contact any adult family member or acquaintance once if they limit their talks to asking for the estate's or the deceased debtor's most recent contact information. There may be no in-depth discussion of the deceased's debt. Because it would violate the Fair Debt Collection Practices Act (FDCPA), the FTC states that the debt collector is not allowed to ask a friend or family member for payment during these phone conversations.
If the deceased was a minor, debt collectors may contact the surviving spouse, the executor or administrator of the estate, or even a parent or guardian. The debt collector may contact the individual or individuals to discuss the specifics of the debt if the debtor permitted the collection agency to contact third parties on their account. Family members must understand their rights in these situations and recognize when a debt collector could be going into overboard.
The legal responsibility for paying a deceased family member's collection account rests with a relatively small number of people. The surviving co-owner of the original account will be held entirely liable for paying off the entire sum if there was a co-signer or joint owner on the account before going to collections. Co-signers need to be aware of their possible responsibilities because this can be a substantial financial burden.
Only if the debts were accrued during their marriage will the surviving spouse be required to pay the collection accounts of their deceased spouse in the few states that have community property laws. Usually, the surviving spouse is not liable for any credit card debt or loans that the dead had taken out before marriage. Surviving spouses may find some respite from this disparity, but it's important to understand the particulars of your state's legislation.
If not, the only way the collection agency can get money is from the estate of the deceased. They might request that a parent, sibling, or child pay back the loan, but often, that family member is not required by law to do so. In these situations, being aware of your rights and the boundaries of a collection agency's authority might assist shield you from unnecessary financial strain.
Regretfully, the actions of certain dishonest debt collectors in practice may not always align with what a collector agency is allowed to do. For consumers and, in this instance, the surviving family members, the Fair Debt Collection Practices Act (FDCPA) can offer very precise rights. Some debt collectors, however, attempt to prioritize short-term financial gain over morality, although they usually run afoul of government regulators or face legal repercussions.
Keep an eye out for these indications of legal infractions about the collection of a deceased family member's debt if they had a collection account. You can shield yourself from excessive stress and harassment by being aware of these unlawful practices:
The options available to debt collectors in the event of the debtor's death are limited. First, as was already mentioned, they can try to get payment from a family member who is legally liable for the loan, like a surviving spouse.
Any co-signers or joint account owners named on the loan will also be the target of their collection efforts. These could include, among other things, acquaintances, business associates, or members of the immediate or extended family.
Instead of going through the estate, the collection agency may think about suing you in court if they believe you legally owe the bill and you refuse to pay it. Don't disregard a court summons if it says a creditor (such as a collection agency) has filed a lawsuit against you. If you don't show up for the hearing, you will lose by default judgment. The collection agency may then pursue aggressive tactics to collect the debt, like garnishing your earnings.
An attempt may be made by the collection agency to make a claim against the estate of the deceased if no legally accountable individuals were left to pay bills.
In the event that the estate does not have enough assets (real estate, money, stocks, etc.) to cover the debt collector, the collection agency will probably mark the account as uncollectible. This implies that they will stop actively pursuing the debt and may even expunge it from their records.
Some debt collectors may still attempt to sell the account to a different collection firm, though. Stories of family members who start getting collection calls five, ten, or even fifteen years after the death of a family member may be found online with little effort. Most of the time, the agency has no legal means of collecting the debt because the state's statute of limitations has passed.
Family members must understand their rights in these circumstances and resist pressure from debt collectors who might be using unlawful methods. Keep in mind that you have the right to contact the Consumer Financial Protection Bureau (CFPB) or your state attorney general's office to request debt validation, contest false information, and report abusive collection practices. You may shield yourself and your loved ones from unnecessary stress and financial hardship during an already trying time by being knowledgeable and standing up for your rights.
Dealing with a loved one’s debt after their passing can be emotionally and financially challenging. While family members may not always be responsible for repaying these debts, it’s crucial to understand your rights and know how to handle communication with debt collectors. Recognizing illegal collection tactics and staying informed about the legal obligations in your state can help protect you from undue stress and harassment during this difficult period.
If your organization seeks support in handling sensitive financial matters with compassion and compliance, consider Shepherd Outsourcing. With a skilled team dedicated to providing tailored outsourcing solutions, Shepherd Outsourcing can help you streamline operations, enhance efficiency, and ensure a respectful approach to debt collection. Connect with Shepherd Outsourcing today to learn more about how they can empower your business.
©2024 by Shepherd Outsourcing.