Collecting Debt From the Newly Bereaved

Mourning Families Harassed by the Creditors of the Departed

by Jennifer Case on September 6, 2011

“You can’t take it with you” applies to more than what you own, but also what you owe. While the process of using the estate of the recently deceased to pay off outstanding debts is nothing new, and entirely sensible and legal, some creditors have taken reclamation of debt to an obscene level. Harassing phone calls are only part of what has become a game of wits between creditors and unsuspecting mourners.

Anecdotal horror stories abound, from being called almost 50 times a day, to threats of foreclosure, aggressive debt collection has become a problem in these situations. The Fair Debt Collection Practices Act prohibits threatening phone calls and other abusive behavior when collecting a debt.

The problem many people have come to realize, though, is that the FDCPA only regulates the third-party debt collecting industry. This means if you have a loan from a bank, anyone the bank hires to collect the debt is regulated. Should the bank itself contact you, the FDCPA does little to protect you. Individual state laws govern banks, and while many states may have similar regulations, it can be language can be rather ambiguous.

While completely legal, another method used by banks may be a bit more insidious. Imagine receiving a phone call or letter from a bank which may offer condolences on your recent loss of their valued customer. Then you learn that your loved one had some outstanding debt, which you are not legally obligated to pay, but for which they have set up a great payment plan with low interest rates.

Creditors are informed by the Social Security Administration about a death within about a month or so after the fact, in some cases sooner. They then may attempt to gently push someone into paying debt while the bereaved are still struggling to put affairs in order. “They don’t necessarily state that you are liable for the debt,” says debt specialist Gerri Detweiler. “But they blur the lines to make you feel like somehow you are responsible for it, even if it’s just a moral responsibility.”

It also creates a type of “competition” between creditors in which they race to be first to contact the executor of an estate. According to Detweiler, “The longer a creditor waits to get paid, the less their chance of getting paid. And unfortunately, they may find that it’s easiest to elicit payment when bereaved relatives are still trying to sort everything out.”

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