The Wall Street Journal is reporting that new Federal Trade Commission (FTC) proposals addressing debt collectors attempting to collect on debts of deceased borrowers may backfire by allowing debt collection agencies to pursue surviving relatives and associates of deceased debtors. Here’s what you need to know.

Consumer Debt Collection Practices: Survivors not responsible for deceased’s debts

Debt collectors have harassed bereaved families by sending collection notices indicating that the surviving family or executor “must” pay the deceased borrowers credit card bills and other debts. Unless you’ve co-signed for a credit card or loan held by the decedent, you’re not under any obligation to pay. Laws governing debt collection can vary from state to state, so it’s a good idea to seek legal advice if you’re being hounded by debt collectors.

Under the FTC proposal, debt collectors would have to identify the responsible party (if any) before attempting to collect debts of deceased individuals. In many cases, no one may be legally responsible for a deceased person’s debts. Don’t be pressured into paying debts that are not your own. The FTC proposal would require debt collectors to inform survivors that they are not obligated to repay a deceased borrower’s debts. Consumer advocates are concerned that the FTC proposal does not provide for legal action or other sanctions against debt collectors that “step over the line” in attempting to collect debts incurred by deceased borrowers.

FTC: 119,000 complaints filed against debt collectors in 2009

Debt collection practices are the major cause of consumer complaints to the FTC. In her Consumer Confidential blog, financial writer Jennifer Waters, clarifies the rights and responsibilities of surviving family members.

  • A decedent’s estate is responsible for paying off debts, not surviving family members (Credit accounts held jointly may be an exception; seek legal counsel in your state.)
  • Notify creditors that they may not contact you regarding debts not your own. Write to the company, and if collection efforts continue, file a complaint with the FTC. This can protect you against litigation filed by the decedent’s creditors.
  • You have the right to inform debt collectors not to contact you at work. You can also file a grievance with the FTC if debt collectors disregard your request not to contact you at work.

Consumers needing help with their own credit card debt consolidation and debt management can find low interest debt consolidation solutions through credit card counseling and debt consolidation programs. Please seek debt help or legal advice if you’re having problems with debt collectors or paying your bills.

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