Gov’t Makes Collecting Deceased’s Debts Easier

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NEW YORK (MainStreet)  —  The Federal Trade Commission (FTC) on Wednesday finalized a new policy for collectors who try to recoup debts from the deceased, allowing them to contact friends and family directly.

Previously, under the Fair Debt Collection Practices Act, collectors were only permitted to contact a deceased debtor’s attorney, spouse, parent or guardian (if the debtor was a minor), as other family members are not obligated to reconcile a relative’s debt.

Collectors were also able to contact a deceased debtor’s estate executor or administrator to retrieve what they were owed. However, the FTC said that since FDCPA’s initial enactment, some states have adopted less formal practices for declaring an executor, which makes it difficult for debt collectors to legally get in touch with the person responsible for outstanding bills. 

As such, the new policy will now allow debt collectors to engage with a dead debtor’s friends and family to try and track down the person now in charge of the payment. While that opens up more people for collectors to contact, the FTC said it changed the policy with families’ best interests in mind.

“A consumer in this vulnerable condition may mistakenly identify himself as the person with whom the debt collector should be speaking,” FTC commissioner Julie Brill said in a written statement. “Worse still, he may end up feeling as if he has an obligation — legal, moral or otherwise — to pay the debt from personal funds, even though debt collectors cannot legally ask him to do so.” Plus, “without a reasonable and narrowly defined safe harbor, a debt collector’s alternative may be to force the appointment of an executor or administrator, which could be costly and time consuming for decedent’s relatives and the estate,” Brill said.

The FTC reiterated though that debt collectors would still be required to follow the FDCPA’ s restrictions on how and when friends and family may be contacted. For example, collectors must avoid creating the impression that an individual is personally liable or required to settle a debt using his or her own assets, or assets held jointly with the deceased debtor.

Learn more about what a debt collector can and can’t do in MainStreet’s look at what to do when one comes calling at your door.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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