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While their debt doesn’t exactly vanish like magic when someone dies, surviving relatives, in most cases, are not responsible for the debt of the deceased.
In the case of joint credit card accounts and mortgages, however, a surviving spouse usually is responsible for any joint debt. In some states, a surviving spouse may be liable for credit card debt, even if the credit card was only in the name of the deceased.
The FTC (Federal Trade Commission) says that the practice of credit card companies trying to collect debt from deceased customers by contacting their surviving spouses, children, siblings, or other relatives is on the rise. This coincides with rising debt amongst retirees, the growing popularity of reverse mortgages, and credit card companies losing money from living customers whose accounts are in default.
But that doesn’t mean you are responsible to pay the debts of the deceased.
Even though surviving relatives are not responsible for most credit card debt, it doesn’t stop credit card companies and debt collection agencies from trying to collect payments from surviving relatives. What can you do if you are the victim of debt collection harassment — and the debt doesn’t even belong to you?
Don’t give debt collectors any personal information.
The FTC warns that many scam artists check obituaries and then call grieving family members and claim to be part of a debt collection agency. If anyone phones to collect a debt, do not give them any personal information, including account numbers or social security numbers, for yourself or the deceased.
Make sure the debt really isn’t your responsibility.
If you are a surviving spouse or co-signer on a loan, you may be responsible for the debt. Check with a lawyer in your area to to find out state laws if you’re not sure if a debt is your responsibility or not.
The debt — or at least, stopping the debt collection calls — could also be your responsibility if you’re the executor of the decedent’s will or the personal representative of the deceased (called an administrator if there’s no will).
What to do if you’re the personal representative for the deceased
Check with a lawyer to make sure you don’t pay the debt collectors with funds that are considered untouchable by creditors, including IRA accounts, life insurance funds, 401(k) programs, and brokerage accounts.
If you’re the executor of the will or the administrator for the deceased, you’ll need to work with the debt collection agency to make sure debt is paid through the deceased’s estate.
Once there’s no more money in the estate, the debt is erased. The bills can go unpaid.
What to do if you’re not responsible for the debt
If you’re not a surviving spouse, the administrator or the executor of the will, or if there’s no more money left in the estate to pay the debt, debt collectors have no right to be calling you. You’re not under any legal obligation to answer the phone or speak to them at all. But if you want the phone calls to stop, it’s best to deal with the matter quickly and professionally.
Simply send a letter to the collector saying you don’t want the debt collector to contact you again. Keep a copy of the letter, and send the original letter by certified mail, return receipt requested.
The collector is then allowed to contact you to confirm receipt of the letter and say there will be no more contact. The debt collector can also contact you to inform you that they plan to take specific action, such as filing a lawsuit.
If the collection agency or creditor does this, it’s best to provide the name of the executor or administrator for the deceased.
It’s important to remember, never give debt collectors any personal information, and do not make payment arrangements over the phone immediately, until you look into the matter and confirm that the debt exists and that you are the person responsible for paying it.