Beware of the Debt Collector

As if dealing with the emotional pain after the death of a loved was isn’t enough, bereaved relatives now have one more thing to be aware of after a family member has passed away; incorrigible debt collectors looking for someone—anyone!—to pay off the debts of the deceased, even if you have no obligation to do so.

David Streitfeld’s article, You’re Dead? That Won’t Stop the Debt Collector, describes the newest strategy of collection agencies during these troubled financial times. In California, relatives are under no obligation to pay the debts of the deceased from their own assets, and a proper estate plan and trust administration will pay outstanding debts from the assets of the deceased before any distribution to heirs. But most people don’t know the laws on this subject, and debt collectors are taking advantage of that ignorance.

“New hires at DCM train for three weeks in what the company calls “empathic active listening,” which mixes the comforting air of a funeral director with the nonjudgmental tones of a friend.” Once you have an emotionally distraught relative on the line, it’s not so difficult to make them feel they are obligated to pay off the debt of the dearly departed—either because they think it’s the law, or out of a sense of honor.

One way to avoid this painful interaction is to have a proper estate plan. If relatives and beneficiaries know a plan is in place, with proper trustees and executors, it’s much easier to say to collectors “I think the Trustee of my father’s estate would know more about this, please contact her…”

We want to warn our clients and their friends and family to beware of the debt collector!