FTC June 2009

Paying the Debts of a Deceased Relative: Who Is Responsible?

After a relative dies, the last thing grieving family members may expect are calls from debt collectors asking them to pay their loved one’s outstanding debts. According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, a surviving relative usually has no legal obligation to pay the debts of a family member who has died. In fact, the rights of surviving relatives are covered by the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Under the FDCPA, which is enforced by the FTC, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

Here’s what the law has to say about who has responsibility for a dead relative’s debts.

• Who is responsible for paying the debts of a relative who has died?
  Generally, someone’s estate is responsible for paying their debts. But if there isn’t enough in the estate to cover the debts, they typically go unpaid.
• Am I legally obligated to pay the debts of a deceased relative?
  You usually don’t have a legal obligation to pay the debts of a deceased relative who was not your spouse. Even a spouse’s obligation to pay may be limited under state probate law. To determine whether you’re legally obligated to pay, talk to an attorney who is knowledgeable about this area of the law.
• What should I do if a debt collector contacts me about a debt of a relative who has died?
  Give the debt collector the contact information of the decedent’s personal representative. That’s the person responsible for settling their affairs, including paying any outstanding debts from the estate. If there is a will, the personal representative is known as the executor; if there is no will, the personal representative is known as the administrator.

Don’t give any of your personal information, like your Social Security number, birth date, or financial account numbers to anyone unless you know who you’re dealing with. Some con artists may check obituaries and other legal notices, and then contact relatives of a deceased posing as debt collectors. These scam artists can use your personal information to help them commit identity theft or other types of fraud.

• Do I have to speak with a debt collector who contacts me about the debts of a deceased relative?
  No. But if you’re a decedent’s personal representative, or otherwise legally obligated to pay the debt, you may want to talk with the debt collector to see if you can resolve the matter.
• Can I stop a debt collector from contacting me about the debts of a deceased relative?
  Yes. If you decide that you don’t want a debt collector to contact you again, write a letter to the collector saying so. Then, make a copy of your letter, send the original by certified mail, and pay for a “return receipt” so you will be able to document what the collector received and when. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact and to let you know that they or the creditor plan to take a specific action, like filing a lawsuit. Remember that even though the collector is prohibited from contacting you again, they still may sue the estate of your relative or the legally responsible person to collect the debt.
• Can debt collectors tell anyone else about my dead relative’s debt?
  Other than to get the personal representative’s location, a debt collector generally is not allowed to disclose your relative’s debt to anyone other than the deceased’s spouse, parent (if your relative is a minor child), or guardian.

For Complaints and More Information

Report any problems you have with a debt collector to your state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Fair Debt Collection Practices Act (FDCPA):

The law outlines consumers’ rights to dispute overdue bills placed with collection agencies, an original credit using a different name to collect the debt, or a lawyer collecting a debt for a creditor.

The FDCPA prevents debt collectors from using unfair, abusive, or deceptive practices to collect overdue bills. Some regulated practices include:

• A collector can contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree.
• A debt collector also may not contact you at work, if the collector knows that your employer disapproves of such contacts. A collector should not make excessive calls to you.
  You can stop a collector from contacting you by writing them a letter, but if the debt is yours, you still owe it and the original creditor may sue you for repayment.
• A collector is prohibited from intimidating the consumer by threatening to notify his employer or friends that he has not paid his bills. A collector can only contact third parties to find out where you live or work, but cannot disclose that you owe money to anyone other than you or your attorney.
• A collector may not attempt to collect more than what is owed.
• A collector may not use offensive language to force a consumer to make payments.

Fair and Accurate Credit Transactions Act:
This act replaces the Fair Credit Reporting Act and provides for everyone to receive one free credit report per year from each of the three major credit bureaus, TransUnion, Experian and Equifax. To access your free report, visit www.annualcreditreport.com or call 1-877-322-8228. It also provides for increased accuracy in reporting, prevention of identity theft and restricts the marketing of financial products using sensitive information that is shared with affiliates.

The Truth in Lending Act – is designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs.

Equal Credit Opportunity Act – This law stops a creditor from discriminating against a consumer on the basis of age, sex, or marital status, reliance on income from a public assistance program, and race, color, religion, or national origin.

Fair Credit Billing Act (FCBA)

This law protects you against billing errors and provides a system to dispute them.
The FCBA settlement procedures apply only to disputes about “billing errors.” For example:

• Unauthorized charges. Federal law limits your responsibility for unauthorized charges to $50;
• Charges that list the wrong date or amount;
• Charges for goods and services you didn’t accept or weren’t delivered as agreed;
• Mathematical errors;
• Failure to post payments and other credits, such as returns;
• Failure to send bills to your current address – provided the creditor receives your change of address, in writing, at least 20 days before the billing period ends; and
• Charges for which you ask for an explanation or written proof of purchase along with a claimed error or request for clarification.

To take advantage of the law’s consumer protections, you must:

• Write to the creditor at the address given for “billing inquiries,” not the address for sending your payments, and include your name, address, account number and a description of the billing error.
• Send your letter so that it reaches the creditor within 60 days after the first bill containing the error was mailed to you.

Send your letter by certified mail, return receipt requested, so you have proof of what the creditor received. Include copies (not originals) of sales slips or other documents that support your position. Keep a copy of your dispute letter.