Credit debt and debtor death November 2011

Who’s responsible for debt when someone dies owing money?  If there are assets, the estate pays the debt prior to distributing any money to heirs.  However, say a parent dies with no assets, what recourse does a child have if creditors try starting to collect?

According to the Federal Trade Commission family members typically are not obligated to pay the debts of a deceased relative from their own assets.  The Fair Debt Collection Practices Act prohibits debt collectors from using abusive, unfair or deceptive practices to try to collect a debt.  Collectors are allowed to contact the deceased person’ spouse, executor, or other person authorized to pay the deceased person’s debts but must stop contact when asked to do so.

A person does have the right to ask a creditor to stop calling.  This needs to be done by a letter asking for no further contact.  A copy of the letter should be kept and the letter needs to be sent certified mail with a return receipt requested.  Collectors can not contact again other than to confirm there will be no further contact or to notify the person they intend to take further action such as filing a lawsuit.

There are certain situations in which a relative could be responsible for the debt.  A few of the situations would be if:

If there are further questions about debt responsibility, an attorney should be contacted.