Coping with Debts of the Dead

Dec. 3, 2011 – This weekend’s Wall Street Journal reported in a front-page article on how debt collectors are targeting spouses, family and friends of recently deceased in an effort to collect debt incurred by their loved ones.

As part of the process described that seems to me like Elder Abuse, the big banks  including Bank of America, Capital One and Discover use collections agencies like DCM Services and West Asset Management to attempt to collect such debt — debt that may not legally have to be paid.  Techniques such as misrepresentation, condolence cards that double as collection letters, calls that begin as if the caller is offering grief counseling, and using language that attempts to convince the survivors that paying off the debt is a “morality payment” — all these techniques are used in an attempt to obtain payments.

A most egregious tactic described in the article involved DCM Services allegedly telling a woman from Michigan that not paying her late father’s credit card balance of about $6,000 would result in the unsecured creditor seizing the father’s home.  In this instance the creditor with a $6,000 amount owed  was not a secured creditor and had no security interest in this man’s house, so the threat  of seizing the father’s home was just a threat.  The WSJ reports that the Florida Attorney General is looking into this case, and both DCM Services and West Asset Management declined to comment.

The article quotes from a recorded call by West Asset Management with Linda Long (68), whose husband died of cancer last year with outstanding unsecured debt in the amount of $16,651 on a Bank of America credit card.  This alleged activity is likely very commonplace.  During the call with Mrs. Long, the debt collector attempted to settle the account for $12,500, asking “if there’s any family member thta can maybe help with the situation.”  Several calls and weeks later, when all Mrs. Long indicated she had left in her deceased husband’s estate was $2,000 from an insurance proceeds payout, the caller readily agreed to take that amount.

The truth was that Mrs. Long couldn’t afford to pay anything and she had no obligation to pay for her deceased husband’s unsecured debt.  The debt was not jointly signed for, as her name was not listed as a co-debtor on the account.  She paid anyway in a frustrated effort to stop the collectors from calling.  The debt was unsecured, as opposed to being secured by collateral such as a car on a car loan or by a house on a mortgage.  The debt was solely in her deceased husband’s name.  Mrs. Long had no obligation to pay, yet she did.  Ss the article pointed out, such debt collectors are paid up to 40% for such payments, much higher than collections on other types of debts.

Such collections practices seem dead wrong.  America’s elderly population, and anyone who is grief stricken by the loss of a loved one, needs help in standing up to such coercive tactics.

Yet help may be the opposite of what the United States Federal Trade Commission (FTC) recently changed by issuing a July, 2011, “policy statement,” according to the article.  Before this  policy statement was issued, debt collectors could only pursue the deceased person’s spouse.  Pursuing the spouse of a recently deceased is bad enough during a grieving period, but the policy statement changed the collections rules such that collectors could also target “anyone believed to be handing the estate, including parents, friends and neighbors.”  The agency reportedly also declined  to impose a cooling-off period during which relatives  couldn’t be contacted by the debt collectors.

For Linda Long and others who are being targeted using such aggressive collections tactics, talking with a reputable consumer rights attorney might be the best option.

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