Death-Debt Collectors

Generally, an individual’s debts die with them. However, debt collectors, working on behalf of large financial institutions like Bank of America and Capital One, will often pressure surviving family members to pay the debts of deceased loved ones. One tactic these death-debt collectors use is to convince surviving family members that they have a moral obligation to pay off the decedent’s debts.

The actual size of the death-debt collection business is unknown, but it seems to be growing. A decline in retirement savings and home values, coupled with an increase in unemployment, has led to more and more Americans dying while in debt.

Death-debt collectors generally get paid based on the amount of debt they are able to recoup. In July, the Federal Trade Commission issued new guidelines for death-debt collection after it received numerous consumer complaints. However, the guidelines now allow debt collectors to contact anyone they believe to be handling the decedent’s estate, not just the decedent’s spouse or someone chosen by the decedent. Though the FTC issued these new guidelines, many surviving families still claim creditors pressure or misled them into paying off the decedent’s debt.  

See Jessica Silver-Greenberg, For the Families of Some Debtors, Death Offers No Respite, The Wall Street Journal,  Dec. 3, 2011. 

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.