Should survivors take on personal liability for a decedent’s debts? — Update

Financially, death is like the final bankruptcy.  The decedent’s creditors submit their claims and the personal representative pays them to the extent possible with the decedent’s assets.  But, if the estate is insolvent, creditors go unpaid. 

Earlier on this blog, I discussed how the argument is now being made that the decedent’s survivors (i.e., family members) should be responsible for making up the difference.

Here is some additional discussion from David Streitfeld, You’re Dead? That Won’t Stop the Debt Collector, NY Times, March 4, 2009:

Dozens of specially trained agents [call] up the dear departed’s next of kin and kindly asking if they want to settle the balance on a credit card or bank loan, or perhaps make that final utility bill or cellphone payment.

The people on the other end of the line often have no legal obligation to assume the debt of a spouse, sibling or parent. But they take responsibility for it anyway. * * *

Dead people are the newest frontier in debt collecting, and one of the healthiest parts of the industry. Those who dun the living say that people are so scared and so broke it is difficult to get them to cough up even token payments.

Collecting from the dead, however, is expanding. Improved database technology is making it easier to discover when estates are opened in the country’s 3,000 probate courts, giving collectors an opportunity to file timely claims. But if there is no formal estate and thus nothing to file against, the human touch comes into play. * * *

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.

The article goes on to explain how the company is successful in getting family members to pay the decedent’s debts for which they have no legal liability.