By: Aaron Huff

This morning, as I sat reading bits of news online, I ran across an article discussing actions of creditors in instances where someone had recently passed away.  In the article, it details several experiences from individuals where creditors of a recently departed loved one had tried (or even attempted to harrass) those grieving the loss.

In one instance, a woman was contacted by Discover shortly after the passing of her mother in which the bank asked if the mourning daughter would “assume” the credit card balance that her mother (a valued card holder!) had left behind.  The terms would grant her 0% interest on the debt for a whole year!  And after that, it would increase to a mere 13.24%!  What a deal!  Other stories about messages (from calls every 15 minutes!) from creditors seeking payment and sometimes harrassing those in mourning mixed in amongst messages from friends’ calls offering their condolences are also told.

How does this happen?  When someone passes, the Social Security Administration issues notification of the passing.  Creditors see this within a month of someone’s passing.  Ethically, it may be a questionable practice to contact mourning loved ones seeking collection of debts, but it is not illegal.  When it as recently asked to impose a “cooling off” period in which creditors could not seek collection following a death, the Federal Trade Commission declined to do so stating that a provision in the Fair Debt Collections Practices Act already covers collections during “inconvenient” times.  The problem with this is that it only addresses this situation with regard to third party collectors, not with banks directly seeking these types of collections.  So creditors almost have a free pass to attempt these types of collections, governed only by ambiguous definitions of what is excessive under each state’s laws dealing with direct collections.  Creditors may even try and blur the perception that a legal obligation exists without expressly saying that there is legal liability by asking questions that are supposed to evoke feelings of moral obligations to pay the debt (such as “did you pay for the funeral expenses?”, etc.).  Ethically sound?  Not really.  Illegal?  Not really (to an extent).

The question that someone receiving such a call should ask is whether or not there is any LEGAL reason that they are obligated to this debt.  Was the person a co-debtor on the account (meaning, was it a joint account?) or did the person co-sign on a debt?  Was the person an authorized user on the account?  If there is no legal tie to the debt, then the creditor is only entitled to what the estate has to offer.  If there is not enough money or property (that could be liquidated) to pay the debt in full, then the creditor is limited to whatever amount they can receive in the estate.

If you have a question as to whether or not you’re truly liable for the debts of a loved one who has recently passed, an attorney may be able to help you.  Bankruptcy may or may not be an option to deal with unexpected debts should it prove that you are liable and a consultation with an experienced attorney could give you guidance.