Death Debt Collectors – Where have Ethics and Common Decency Gone?

This week in the Wall Street Journal the practice of “death debt collecting” was described.  (Read the whole Wall Street Journal article here.)  The practice is so vile that companies such as Bank of America use outside companies to do the dirty work so that their hands stay clean.

The way these companies work is as follows:  The companies find people who have recently died and who have outstanding debt.  In some cases they may be contacted by a bank or credit card firm to whom money is owed.  In some cases, they comb through obituaries.

These companies then call up the family and friends of the deceased, often right in the middle of the mourning period when emotions are fresh and people aren’t thinking straight.  Some of them tell the truth – that the people they are contacting are not obligated to pay the debt.  Other times they don’t mention this fact and try to trick people into thinking they are liable. 

They then use ploys like talking about preserving the deceased’s good name, act like they are there to help while trying to get the family and friends to pay the debt, and use other tactics to try to get people who do not owe the money to pay the debt.

Just as with a standard debt collection, they may call hundreds of times a week.  Their goal is to cause people to get emotional and do irrational things like hand over life insurance benefits despite needing that money for food and shelter after a breadwinner is gone.  These people are absolutely despicable.

Know your rights.  If a person owes a debt, that debt must be paid from their estate before funds are distributed to hiers.  It there are not sufficient assets in the estate to cover the debts, however, unless someone else is a co-signer on the account or loan they are not responsible for the debt.  Bottom line – if you did not sign for the loan you are not responsible and don’t let anyone tell you that you are.

Luckily, there is a law that offers some protection called the Fair Debt Collection Practices Act.  Under this law you can request that the collector prove that you owe the debt.  You can also request that the collector cease all communications with you.  If they continue to call or harass you after you have asked them not to, you then have recourse to sue them.  I hope you do. 

With a properly allocated portfolio, you can live a worry free retirement.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.


    • That’s the point. Even though the family doesn’t owe the debt, and doesn’t need to pay the debt, the collection agencies use their state of mind to get them to pay money anyway. If the phone is ringing 10 times a day while you’re grieving, you might want to send in a check just to get them to stop pestering you. Also, they may decide to pay the debt because they don’t want the deceased’s name to be drug through the mud. In some cases, the agencies actually break the law by making it sound like the famility does owe.

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