Tag Archive for debt collector

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

October 25, 2009 Credit Manager Credit Repair Articles & Resources, FTC Updates

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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Original creditor settlement tips

February 19, 2009 Credit Manager Credit Repair Articles & Resources

If your account has yet to be turned over to a collection agency theres still time to make the best with the original creditor. Original creditors have their own in house collection efforts but usually after 4 months, the account will be turned over to a third party debt collector.

If you have issues with the account, its best not to hide and hope for the best. You can negotiate with the original creditor to avoid the account being turned over to a collection agency.

Communication is key. The OC is not going to go away. They aren’t simply going to wipe away your balance because you’re hiding. You need to call them and explain your situation.

During these difficult times with our economy, OC are bending more and more. Where they used to refuse specialized payment terms and negotiating credit ratings, they now realize it’s in their best interest to work with you.

OC response varies from creditor to creditor but the simplest way to know where you stand is to pick up the phone and get a hold of your account manager. Everyone is hurting right now, people have lost their jobs all across the country so this needs to be relayed to your creditor.

Explaining your situation will get the ball rolling on working together. The OC may agree to cease late fees and put you on a payment plan to  help you temporarily. They understand that you have the right to file for bankruptcy or go into a credit counseling program so they are willing to help the majority of the time.

By contacting the OC you may be able to stop the collection process. They may agree to freeze the account or even lower your interest to make the debt affordable. They want to be paid and they also want to hold onto the debt if possible. It costs money to give the debt to a collection agency.

If the debt is secured such as a mortgage or auto loan, the options may be more limited but banks are doing loan modifications right now on secured loans, so make the effort to see what can be done. If the debt is unsecured like credit card debt, the creditor knows they have  no collateral on the loan so they will be more flexible in working with you.

You may be able to set up a 12 to 24 month plan with them for reduced interest, no late fees and smaller payments in addition to avoiding the dreaded turn over to a collection agency.

The OC may also be more willing to freeze the reporting to the credit bueaus while your on a modified plan. Your credit rating is an important part of the negotiation process to keep in mind. Again, it cant hurt to ask.

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Biggest FTC crackdown on collection agency ever. 2.25 million

December 6, 2008 Credit Manager FTC Updates

This latest action should send a very strong message to collection agency owners. Was it worth it? 2.25 million for violating the FDCPA and the FTC Act.

The release below from the FTC states the details of the collection agency who received over 1,000 complaints for depositing post dated checks early, misleading debtors, harassing consumers and telling others about the debts. Is there anything they didn’t do? This is exactly the kind of abuse that sticks in my craw. Total disregard for peoples’ basic rights.

If you have an outstanding debt with Academy Collection Services, now is the time to review that debt for any possible violations. You have an opportunity here to make the best of this issue since the case with them is fresh on the FTC’s most wanted list.Consumer outcry is a powerful weapon. Because of all the complaints that people went to the trouble of filing, these actions were possible. I wonder how many were abused that didn’t complain?

Nationwide Debt Collector Will Pay $2.25 Million to Settle FTC Charges

Academy Collection Service, Inc. and its owner, Keith Dickstein, have agreed to pay $2.25 million to settle Federal Trade Commission charges that Academy and its collectors misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, in violation of federal law. This is the largest civil penalty the FTC has obtained in a debt collection case.

“These defendants are responsible for their debt collectors’ abusive practices,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “They ignored people’s complaints and rewarded the collectors who broke the law. This is not a business model that the FTC tolerates.”

According to a complaint filed by the Department of Justice on the FTC’s behalf, Academy collectors violated the FTC Act and the Fair Debt Collection Practices Act (FDCPA) while collecting debts, and Dickstein failed to stop the violations. The complaint also names Edward L. Hurt III and Albert S. Bastian, who oversaw Academy’s Las Vegas collection center and who are not part of the settlement with Academy and Dickstein.

The individual defendants allegedly participated in, or had the authority to control, Academy’s practices. Academy’s collectors allegedly engaged in false or deceptive threats of garnishment, arrest, and legal action; communication with third parties about consumers’ debts; and calls to consumers at their workplace when the employer prohibits such calls. Other practices included frequent, harassing, threatening, and abusive calls; unfair and unauthorized withdrawals from consumers’ bank accounts; and early deposit of postdated checks consumers submitted for debt payment.

More than 1,000 complaints against the company were filed with the FTC, various state attorneys general, the Nevada and Pennsylvania Better Business Bureaus, and the company itself. The FTC alleges that, without sufficient investigation, the defendants dismissed consumer complaints or did not properly discipline collectors, and that collectors who were terminated for FDCPA violations often returned to work within a few weeks or months.

Under the settlement, Academy and Dickstein will pay a $2.25 million civil penalty. The consent decree bars them from misrepresenting to consumers that nonpayment of a debt will result in the garnishment of wages, seizure or attachment of property, or lawsuits, or misrepresenting that Academy representatives are attorneys.

The settling defendants are also prohibited from improperly communicating with third parties about a debt; using false, deceptive, or misleading representations in debt collection efforts; communicating with a consumer at any unusual time or place, including the workplace; or harassing, oppressing, or abusing any person in connection with debt collection. The settling defendants are also barred from making any withdrawals from consumers’ bank accounts without obtaining the consumers’ express informed consent, and they cannot deposit or threaten to deposit any postdated check or other postdated payment instrument prior to the date on the check or instrument.

In addition, the consent decree requires the settling defendants to clearly and conspicuously disclose to consumers that they may stop Academy from contacting them about the debt. They also must notify consumers that they may contact an Academy physical address, e-mail address, or toll-free phone number if they have a complaint about the way the company is collecting the debt. -FTC

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Debt Collectors make couple’s life a living hell

November 28, 2008 Credit Manager Credit Repair Articles & Resources

The Crabills seem like a nice enough upstanding couple but in the debt collectors eyes they were deadbeats. The Crabills were being hounded relentlessly day and night by CitiFinancial for $20,000.00 in what Citi deemed was an unpaid portion of their refinanced mortgage.

The couple battled the collectors day and night and said the were relentless, especially the calls to their jobs. CitiFinancial eventually sued the couple but they fought back and filed a counter-suit and Citi eventually admitted they were wrong. The Crabills did not owe the balance.

Unfortunately, this type of abuse is all too common. If you are being hounded by debt collectors day and night be sure to use the Fair Debt Collection Practices Act to protect yourself. You cannot be humiliated into paying a debt nor can you be harassed. The FDCPA lays out exactly what a debt collector can and cannot do to you.

You can also turn to a non profit credit counseling agency like Careone to get the debt collectors off your back. If you have some money set aside, you can also negotiate a reduced payoff with the debt collectors either through a firm like Hoffman Brinker or a DIY debt settlement method.

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