Late last year I wrote about how to handle an inherited underwater house. A similar topic came up in a recent article on the Internet news site Vox: What about a non-secured debt (like credit card debt) owed by a deceased debtor that someone is trying to collect on?
It should go without saying that in most cases these types of debts aren’t collectable as they belong to the decedent, and such debts do not pass to their heirs. Although, there are a few points from the article and from a New York bankruptcy lawyer’s perspective that can help.
(1) As the article relates, if a probate estate has been created, anyone contacting you about the debt, even if they do so in good faith, should promptly consult with that estate’s executor. If you’re the executor, tell the creditor to file a claim with the probate court. You are not bound to tell the creditor how much money the estate has or promise to repay the debt. Let the legal process handle it.
(2) If you’ve hired a probate lawyer (or bankruptcy lawyer as the case may be) give the creditor his or her information. Say nothing else. Contact your lawyer if the creditor ever contacts you or another family member again. Likewise, make sure all the decedent’s relatives know to direct any inquiries to the lawyer as well.
(3) If the creditor is a debt collector, it will not go out of its way to inform you that you may not be responsible for the debt.
(4) The most likely scenario in which a creditor might have a valid claim is if the debt was co-signed by a living person, who is usually going to be a relative of the decedent and a likely inheritor of any of the probate estate’s property. Obviously direct any claims to the executor or lawyer(s) as discussed above. Otherwise, let the creditor know who the co-signor is if it doesn’t already, and tell the co-signer as well. There’s no good reason to let payments fall short if they are legally owed.
The good news from the Vox article is that government regulators, namely the Federal Trade Commission or Consumer Financial Protection Bureau, are cracking down on attempted collections of debts owed by deceased individuals.
If you are getting calls from debt collectors, they might be violating the Fair Debt Collections Practices Act (FDCPA) or the Telephone Consumer Protection Act (TCPA). Otherwise, if the co-signor of one of your loans just died and you were relying on that individual to repay the loan, then you might need to talk to an experienced bankruptcy lawyer.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced fair debt collection practices act Bruce Weiner for a free initial consultation.