Bankruptcy

Are You Responsible for the Debt of a Deceased Relative? Beware of Vulcans

By Meaghan Olson

When a dear family member dies, the last thing you want to think about is money ? unfortunately, financial problems arise sometimes.

Besides funeral and burial costs, you may be forced to deal with the unpleasant question of financial obligations your loved one left unpaid.

Here?s what you need to know.

Protection from the Fair Trade Commission

The law that protects you from a family member?s debts is called the Fair Debt Collection Practices Act and is enforced by the FTC, a government consumer protection agency. Basically, the law outlines the following terms.

• Who?s responsible for debts after death? In most cases, payment of any debts comes from the deceased?s estate. If money from the estate is insufficient to cover debts, they usually remain unpaid.

• Is there a legal obligation to pay remaining debts? Most relatives are not legally required to pay debts. You may be obligated to cover debts left by a spouse; however, responsibility is often limited by state law. A bankruptcy lawyer in your state may help you learn more about state law and debt.

• What should I do if debt collectors try to make me pay? First of all, don?t give out any of your personal information (SSN, bank account numbers, etc.). Some con artists stalk the obituaries and pose as debt collectors as a way to steal identities and money. Instead, direct the collector to the deceased?s representative (an executor of a will or an administrator).

• Can I ignore debt collectors who contact me about debts? Technically, you can. But if you?re representing the deceased or otherwise responsible for his debts, you may want to negotiate with the collector to see if you can work out an arrangement.

• How can I stop a creditor from contacting me? Write a letter to the collector asking her to stop attempting to collect the debt. Copy the letter and send it by certified mail so you?ll get a receipt when it arrives. After the creditor has received your letter, she can only contact you for two reasons: to announce a specific action (like a lawsuit) or to announce the end of collection attempts.

• Can creditors tell others about a relative?s debt? Unless the creditor needs contact information for the representative of the deceased, he is generally prohibited from telling anyone besides a spouse, parent or guardian.

Additional Resources

Fair Debt Collection Practices Act

Debt Collection FAQ

Full post as published by The Bankruptcy Blog on August 06, 2009 (boomark / email).