When a loved one passes away, many left behind are conscious of the physical possessions and the money that will need to be distributed. While all of this is something that needs to be done, one large looming issue is any debt that remains. Where does the debt go? Who is responsible? The probate process begins, and loved ones are not only left with the loss but also with creditors demanding payment.
Upon on individual’s death, his or her assets and finances are distributed. This may be done by an administrator that is named by the will of the deceased. If there is not a will or an administrator is not appointed, then the courts will take over the estate. This is a process known as probate. During this process, which can take anywhere between nine months and a year and a half, the following occurs:
1. Validity of a will is confirmed
2. Property is transferred
3. Financial responsibilities are assigned
Once an individual has passed away, they are no longer able to pay creditors. However, that does not mean that the creditors will not continue to collect. If you are a joint owner on any accounts, you are still fully responsible for this debt. This includes a credit account or a loan such as for a car or a mortgage. The loan fully transfers to your name and will remain a part of your credit, good or bad. For this reason, among others, one must be careful when they co-sign for a loan or a line of credit.
There are many cases in which there was no co-signer and the deceased was the only person on the debt. Generally speaking, the debt dies with them. Yet, that does not stop creditors from attempting to get payment. Typically, assets of the estate are sold to pay for what remains of the debt. If the amount raised from the sales does not cover the debt, the remaining balance is often written off.
According to the Federal Trade Commission (FTC), the agency responsible for consumer protection, family members are not generally responsible for the remaining debt. They do not need to sell their assets in order to pay the debts. Most certainly, the Fair Debt Collection Practices Act (FDCPA) makes it illegal to use abusive, unfair or deceptive techniques to collect a debt.
Fair Debt Collection
Under the FDCPA, debt collectors have the right to obtain information from third parties in an attempt to get a debt paid. They are legally allowed to call the deceased’s spouse, parent/guardian, executor or administrator to acquire the name, address, and telephone number of someone who has repayment authority. They are only allowed to call once, unless they have a reason to believe that the initial information given was false.
Collectors cannot say anything about the debt to the third party, just make an attempt to retain contact information. However, even if you are legally authorized to pay a debt, you still have the right to stop creditors from calling you. Simply write a letter to the creditor letting them know that they are not allowed to call you anymore. A telephone call is not enough; the request must be in writing to maintain a paper trail. Keep a copy for yourself and pay for a “return receipt” so you can document precisely when the creditor received the letter. After the receipt, the creditor may only make one phone call to you, and that is simply to verify that you will receive no more calls from them.
If you are being harassed by creditors for repayment of a debt under someone who is deceased, you can file a complaint with the state attorney general’s office. You may also want assistance in deciding what you are responsible for and what is covered by the estate. A probate administration attorney will be able to help you through this process. It is stressful enough having a loved one pass away, but to be harassed by creditors may be just too much to handle.