New Guidelines for Debt Collectors Seeking Payment from Relatives of Deceased Debtors

After 119,000 consumer complaints were filed with the Federal Trade Commission in 2009 regarding harassing debt collectors and their deceptive practices, new proposals and guidelines have been released for debt collectors seeking to be paid from relatives of deceased debtors.

At Miss Money Bee, we aim to keep our readers informed on the latest personal finance news and consumer credit rights. People who have found themselves mourning the loss of a loved one while dealing with aggressive debt collectors will appreciate these new guidelines a little more than the rest of us.

Here is a breakdown of your rights:

*Please note that these guidelines may change depending on what state you live in.

1. Debt collectors are required to identify the responsible party of the debt — Under the new FTC guidelines, debt collectors cannot try to collect any money from family members or spouses until they know who is responsible for the debt owed.

2. Family members are NOT legally required to pay off debt from a deceased family member — Typically, debt collectors send collection notices to family members or spouses of a recently deceased debtor indicating that they must pay the deceased person’s credit card debt or other  debts – this is FALSE.  Unless you have cosigned for a credit card or loan with the deceased person, you are not legally obligated to pay the deceased persons debts from your income. If you are appointed assets from a deceased person’s estate, such as money and property owned by the person prior to death, you are then required to pay off the deceased person’s debt from that money and debt collection agencies are allowed to contact you and try to gain those funds.

3. Debt collectors are only allowed to seek payment from the estate – This means, if the deceased person left his assets and estate to you in a will, you are the person who will be required to use that money to pay off whatever debts they owe.

4. You do NOT have a moral or legal obligation to make a payment to a debt collector on behalf of the deceased person’s debt – Some creditors will tell you have an obligation to make a donation or payment to them on behalf of your spouse’s/loved one’s debt, but you DO NOT.

5. Debt collectors are allowed to communicate with the deceased person’s spouse or administrator of the estate regarding debts owed — Debt collectors also may communicate with family members and others to locate someone who is authorized to pay the deceased person’s debts from the estate. The commission said this was in the best interest of everyone involved because it could help prevent some estates from going through the lengthy probate process.

6.Debt collectors may not use the word “debts” when reaching out to deceased person’s family – When seeking to identify someone who is authorized to pay the deceased person’s debts from the estate, collectors may not use the word “debts” but instead can say they “wish to discuss payment of the deceased person’s bills.”

7. Debt collectors may not contact family members and others “at unusual or inconvenient times or places” – This entitles family members to not be contacted early in the morning or late at night and also requires debt collectors to respect a “cooling-off period” in the immediate aftermath of a person’s death.

In addition to these guidelines, family and friends are advised to say nothing to debt collectors if they do receive a phone call or letter in the mail about a debt that a deceased owes.  Some collectors will snoop around and try to take advantage of grieving family members by asking what may seem like harmless questions such as “are you the person who paid for the funeral?” or “are you the person that has been attending to the deceased persons mail since his/her passing?”  These may seem like minor questions but if you tell the debt collectors that you are in fact the person that has followed through with the previously stated responsibilities, they are going to then assume you are the person that is in charge of resolving the estate and therefore will assign you to be the prime person that they harass and continuously contact for debt payments.

These new FTC guidelines will take effect on Aug. 29, 2011.  Click here for more details about these new guidelines and how they may affect you in the state that you live in.