Protect Yourself from Debt After Death

Let’s make one thing clear right off the bat: You don’t have to pay the debts of a family member or relative who has passed away.

This weekend, the Wall Street Journal reported that debt collection agencies are increasingly targeting loved ones in their attempts to recoup money owed by a deceased family member despite the fact that there is usually no obligation for them to pay.

Here are three lessons that everyone should be aware of in order to avoid getting harassed into unnecessarily paying off debts owed by someone else:

1. Debt collectors use specific strategies for talking to family members

It’s such a big industry (more than $1 billion, according to the Wall Street Journal article) that certain companies have been created to focus solely on recouping money from family members of deceased debtors. One example is a company called DCM Services that has developed emotionally-based tactics for getting results while avoiding any potential public relations disasters that could be a nuisance for the banks and other large companies that hire debt collectors. DCM calls their method “empathetic active recovery.” But the end result — convincing people who are mourning the loss of a loved one that they must pay off a debt they have no legal obligation for — is very clearly outside the realm of empathy.

Lesson: Don’t let yourself get confused by emotional language or complicated terms that debt collectors may use to convince you to pay a debt you don’t owe.

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2. Despite what they might say, your assets are outside their reach

In most cases the debt collector cannot make you pay anything because the legal obligation for the debt does not extend to you. Of course, if you co-signed a mortgage or other loan you will have to continue paying for it. Likewise if you held a joint credit card account. However, barring those circumstances, you don’t owe the lender anything. They will attempt to persuade you to pay by appealing to your sense of moral obligation or by misleading you into thinking the debt falls on your shoulders. They may offer to resolve the debt for a fraction of the amount or ask if you can commit to monthly payments to wipe the slate clean.

Lesson: Don’t take their bait. Remember that their interest is in squeezing as much money from the account as possible, regardless, and that you don’t have any legal responsibility to pay off a debt that’s not yours.

3. If you feel you’ve been victimized, there are ways to fight back

The article mentioned above quotes a recorded phone call from a debt collector to a woman named Linda Long, whose husband died of colon cancer while owing $16,000 on a Bank of America credit card. The phone record shows the debt collector saying

“I just want to ask to see if there is anything that can be done since, you know, it is a large bill. Just a couple thousand dollars. It would be writing off over $14,000… You don’t think the family is in a position to help you out with that?”

Mrs. Long was persuaded to pay an amount she could not afford, under the mistaken assumption that action was necessary to wipe out the debt. She later sued Bank of America and the debt collection agency for harassing and misleading her. Many others have sued the lenders and/or debt collection agencies. William Howard, a consumer-rights lawyer also quoted in the article, says he is working on 50 such cases this year, up from 10 last year. He told the Wall Street Journal

“Collectors are starting to realize just how much money you can get from someone when they are at their most vulnerable.”

Lesson: Be informed and aware of what is happening. To learn more about your rights, read these guidelines from the Federal Trade Commission:

Ultimately, as long as you understand that the debts of a family member are not legally your responsibility, you’ll be able to protect yourself.

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  • forthepeople

    There oughta be a law to keep these vultures away.