Carreon and Associates Blog

Posts Tagged ‘legal obligation’

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

October 25th, 2009

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. (cease and desist letter information can be found here)

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.

We recommend that you visit the FTCs website for more information on filing a complaint if you feel you have been harassed or abused by a collection agency. On the home page simply click, file complaint.

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Posted in Articles & Resources, FTC Updates

Tags: abusive collection agencies consumer protection agency debt collection practices debt collector deceased debtor decedent deceptive practices delinquent debts fair debt collection fair debt collection practices act fdcpa federal trade commission grieving family legal obligation outstanding debts probate law

Collecting from the dead – Know your rights

March 9th, 2009

With the country stressed out from this looming credit crisis it seems the collection industry has found a new object of their affection. Dead people.

Most of us still among the living are having a tough time paying our bills and collection agencies know it. They are having to work harder than ever to get a penny from a debtor.

While most of us cant even pay our necessities, we no doubt will ignore accounts that have gone into collections. The money simply isn’t there but the collectors think that we’re likely to pay a dead relatives bills because of guilt and what we feel is a moral obligation to honor the deceased’ debts.

Trouble is, on average, you are not liable for these debts and don’t have to pay them but you wont hear that from the collection agencies unless you ask. The collectors are banking on your feeling of moral obligation not to have the deceased look like a deadbeat, no pun intended.

Laws vary from state to state but generally if there is no estate to pay the debts then it’s not a relatives responsibility to do so. If a spouse has died however and you had joint debts, you may need to pay up, but getting the facts is a must before you fork over a penny.

According to the New York Times, collectors are zeroing in on the rest of us for these deceased debts and you will not be told up front that you don’t have to pay it unless you ask. Many of the agencies are even training their collectors to be the soft gentle support system on the other end of the phone but don’t be fooled. They are playing a part to get your money.

Before you pay a dime or even indulge in communication with the collection agencies make sure first that you have a legal obligation to the debt. Don’t pay it because you feel like its the right thing to do. Trust me, dead people could care less if Sears gets paid.

Simply pay attention to who the debt was for. If you didn’t cosign or are the spouse then chances are it isn’t your problem. If there is an estate then let the collector do his job by filing claims to be paid. Don’t give them any of your money.

The most important thing is to not feel guilty. The collector will work you because they know good honest people want to do the right thing. Usually the only time I would consider paying a debt that isn’t mine is if it were a family friend we owed money to or perhaps a family doctor who has really cared for your loved one. Anything else like Discover, Sears, – who cares. They’ve reamed us all enough as it is.

If the debt is secured and you want to hold onto the property, chances are you are already paying that bill if you want to keep the merchandise (car, boat, home etc).

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Posted in Articles & Resources

Tags: banks collecting deceased debts collection agencies collections credit crisis deadbeats debtor debts legal obligation money moral obligation new york times

For People on Debt Management Plans: A Must-Do List

November 21st, 2007

Reputable credit counseling organizations employ counselors who are certified and trained in consumer credit, money and debt management, and budgeting. Those organizations that are nonprofit have a legal obligation to provide education and counseling.

But not all credit counseling organizations provide these services. Some charge high fees, not all of which are disclosed, or urge you to make “voluntary” contributions that can cause you to fall deeper into debt. Many claim that a debt management plan is your only option before they spend time reviewing your financial situation, and offer little or no consumer education and counseling. Others misrepresent their nonprofit status or fraudulently obtained nonprofit status by misrepresenting their business practices to regulators.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, and some state Attorneys General have sued several companies that called themselves credit counseling organizations. The FTC and the states said these companies deceived consumers about the cost, nature, and benefits of the services they offered; some companies even lied about their nonprofit status. Several of these companies are now going out of business. Similar companies also may be shutting their doors, even though they haven’t been sued by the FTC or the states. That could be of special concern if you have a debt management plan with one of these companies.

Must-Dos for Anyone With A DMP

Organizations that advertise credit counseling often arrange for consumers to pay debts through a debt management plan (DMP). In a DMP, you deposit money each month with a credit counseling organization. The organization uses these deposits to pay your credit card bills, student loans, medical bills, or other unsecured debts according to a payment schedule they’ve worked out with you and your creditors. Creditors may agree to lower interest rates or waive certain fees if you are repaying through a DMP.

The FTC has found that some organizations that offer DMPs have deceived and defrauded consumers, and recommends that consumers check their bills to make sure that the organization fulfills its promises. If you are paying through a DMP, contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the organization handling your DMP. Once the creditors have accepted the DMP, it is important to:

make regular, timely payments.
always read your monthly statements promptly to make sure your creditors are getting paid according to your plan.
contact the organization responsible for your DMP if you will be unable to make a scheduled payment, or if you discover that creditors are not being paid.

You need to be aware that if payments to your DMP and creditors are not made on time, you could lose the progress you’ve made on paying down your debt, or the benefits of being in a DMP, including lower interest rates and fee waivers. Although creditors may have forgiven late payments that you made before you began the DMP, the creditors may be unwilling or unable to do so if payments are late after you have enrolled in a DMP. If you fall behind on your payments, you may not be able to have your accounts “re-aged” again (reported as current), even if you start a new DMP with a new counselor. That means your credit report will have “late” marks and you will rack up late fees, which, in turn, will lead to more debt that could take longer to pay off.

If Your Credit Counselor Has Gone Out of Business

What happens to your DMP if the credit counseling company that managed your debts shuts down? A counseling agency that is going out of business may send you a notice telling you that your DMP is being transferred to another company. Or it may tell you that you need to take some action to keep your financial recovery on track. If a government agency has filed an action against your credit counseling company, you may get a notice from a third party. If you discover that the organization handling your DMP is going out of business you need to:

contact your bank to stop payment if you are making your DMP payments through automatic withdrawal.
start paying your bills directly to your creditors.
notify your creditors that the organization handling your DMP is going out of business. Consider working out a payment plan with your creditors yourself. Ask if they will give you a reduction on your interest rate without a DMP.
order a copy of your credit report. Check for late payments – or missed DMP payments – that may result from the company going out of business. If you see “late” notations you don’t expect, call the creditor immediately and ask that the notation be removed. Understand that they have no obligation to do it.

If payments are late because the organization handling your DMP has failed to make scheduled payments, the consequences can be just as devastating as if you failed to make payments to the DMP. If you do not act quickly to make arrangements with your creditors, you could incur late charges that increase your debt, lose the lower interest rates associated with the DMP, and have “late” marks on your credit report.

Important Questions to Ask When Choosing a Credit Counselor

If the organization you were working with shuts down, you may be able to work a payment plan on your own directly with your creditors. But if you decide that you need additional credit advice and assistance, or if you are considering working with a credit counselor for the first time, asking questions like these can help you find the best counselor for you.

What services do you offer?
Look for an organization that offers a range of services, including budget counseling, savings and debt management classes, and counselors who are trained and certified in consumer credit, money and debt management, and budgeting. Counselors should discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems now and avoid others in the future. An initial counseling session typically lasts an hour, with an offer of follow-up sessions. Avoid organizations that push a debt management plan as your only option before they spend a significant amount of time analyzing your financial situation. DMPs are not for everyone. You should sign up for a DMP only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money.If you were on a DMP with an organization that closed down, ask any credit counselor that you are considering what they can do to help you retain the benefits of your DMP.
Are you licensed to offer your services in my state?
Many states require that an organization register or obtain a license before offering credit counseling, debt management plans, and similar services. Do not hire an organization that has not fulfilled the requirements for your state.
Do you offer free information?
Avoid organizations that charge for information about the nature of their services.
Will I have a formal written agreement or contract with you?
Don’t commit to participate in a DMP over the telephone. Get all verbal promises in writing. Read all documents carefully before you sign them. If you are told you need to act immediately, consider finding another organization.
What are the qualifications of your counselors? Are they accredited or certified by an outside organization? If so, which one? If not, how are they trained?
Try to use an organization whose counselors are trained by an outside organization that is not affiliated with creditors.
Have other consumers been satisfied with the service that they received?
Once you’ve identified credit counseling organizations that suit your needs, check them out with your state Attorney General, local consumer protection agency, and Better Business Bureau. These organizations can tell you if consumers have filed complaints about them. The absence of complaints doesn’t guarantee legitimacy, but complaints from other consumers may alert you to problems.
What are your fees? Are there set-up and/or monthly fees?
Get a detailed price quote in writing, and specifically ask whether all the fees are covered in the quote. If you’re concerned that you cannot afford to pay your fees, ask if the organization waives or reduces fees when providing counseling to consumers in your circumstances. If an organization won’t help you because you can’t afford to pay, look elsewhere for help.
How are your employees paid? Are the employees or the organization paid more if I sign up for certain services, pay a fee, or make a contribution to your organization?
Employees who are counseling you to purchase certain services may receive a commission if you choose to sign up for those services. Many credit counseling organizations receive additional compensation from creditors if you enroll in a DMP. If the organization will not disclose what compensation it receives from creditors, or how employees are compensated, go elsewhere for help.
What do you do to keep personal information about your clients (for example, name, address, phone number, and financial information) confidential and secure?
Credit counseling organizations handle your most sensitive financial information. The organization should have safeguards in place to protect the privacy of this information and prevent misuse.