The last thing you want to deal with after a loved one dies is an overly aggressive debt collector who cannot accept the fact you do not want to talk with him or her. With online sites such as MyLife making it easier to track people down, it is no surprise third party debt collectors contact friends and relatives to collect debts.
In many cases, debt collectors purchase debts from the original creditor for pennies on the dollar, which means collecting even a fraction of the original debt will return a profit. The question for friends and relatives of deceased borrowers that owe money is this: Are you on the hook for the deceased person’s financial obligations?
What the Federal Trade Commission Has to Say
As the government agency that regulates debt collectors, the Federal Trade Commission (FTC) has repeatedly issued rulings clearly stating family members do not have to pay the debts accumulated by deceased relatives.
Moreover, every consumer receives legal protection from the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from abusing or threatening consumers, as well as using deceptive practices to collect debts.
In the case of contacting friends and family members to collect the debts of deceased consumers, some debt collectors resort to lying about the legal responsibilities friends and relatives have in clearing up deceased consumer debts.
Under the FDCPA, a debt collector can be an agency, attorney, and companies that purchase delinquent consumer debts.
![Is a Debt Collector Trying to Collect a Debt From the Deceased?]()
What Happens to a Debt after a Borrower Dies?
The FTC has created legal language that protects friends and relatives of deceased consumers. According to the FTC website, liquidation of a deceased person’s estate it the most common way to take care of outstanding consumer debts.
If the liquidation of an estate does not cover an entire debt, then the debt typically does not get paid. However, there are a few exceptions to the rule. First, if you co-signed a loan or credit card application, you are responsible for taking care of the debt after a loved one passes away.
If you live in a community property state like California, you might be legally liable for taking care of a deceased person’s debts. Some states require the spouse of the deceased to handle some types of debts, such as health expenses.
Finally, you are on the hook for deceased family member debts if you assumed legal responsibility for liquidating the estate and failed to comply with specific state probate statutes.
Penalties for Violating the FDCPA
The incentive to make money does not deter some third party debt collectors from violating one or more FDCPA provisions. It is highly unlikely that a debt collector will berate you or threaten you to a collect a debt from a deceased relative.
However, this does not mean the debt collector will follow the FDCPA. As most consumers are not aware of how the FDCPA grants legal protections, unscrupulous debt collectors might try underhanded tactics to collect money from friends or family members.
Any violation of the FDCPA can initiate a lawsuit that seeks both statutory damages of $1,000 and actual damages that are not capped.
To learn more about how the FDCPA protects you, complete the free evaluation form to speak with a consumer protection law attorney.
Additional Resources