Consumer Debt and the Death of a Loved One

When a loved one is sick or passes away, most of us are not thinking about consumer debt. But at some point, you may need to deal with the debt that a loved one leaves behind, particularly if the deceased person was your spouse. According to a recent article in USA Today, dealing with a loved one’s terminal illness while worrying about credit card debt can be particularly difficult. What do you need to know about consumer debt as it pertains to a recently deceased loved one? Can you be held accountable for bills and credit card debt owed by another?
Family Members and Debt Possession
If your spouse charges a significant amount of credit card debt, will you be responsible for that debt in the event of death? That is the question that one USA Today reader asked, concerned about consumer debt and bankruptcy. An article drafted by the Federal Trade Commission (FTC) provides some useful information about how a loved one’s debt can affect others. In general, family members of those with substantial consumer debt should know that the Fair Debt Collection Practices Act (FDCPA) prohibits abusive, unfair, and deceptive practices by debt collectors when they are attempting to collect debts. The protections of the FDCPA do not apply only to the person who racked up the debt—they also apply to family members.
If you do have debt collectors calling you about a spouse’s debts, it is important to understand what happens to a person’s debts after death. Generally speaking, debts do not go away when a person dies. Instead, the estate of the deceased is responsible for the debt. In other words, if the deceased person dies with certain assets, his or her estate will use what is left to pay off debts. But if there are not sufficient funds remaining, debts generally will go unpaid. However, there are a number of exceptions. Generally, you may be responsible for a loved one’s debts upon his or her death if:
  • You co-signed the obligation, such as a loan;
  • The deceased person is your spouse and you live in a community property state;
  • The deceased person is your spouse, and there are state laws that require you to pay for a spouse’s “necessities,” such as medical care; and/or
  • You were the executor or executrix of the estate and failed to comply with laws for paying certain debts from the estate.
You should also discuss your situation with an experienced Chicago consumer protection lawyer if you have questions or concerns. Generally speaking, however, Illinois is not a community property state in which a spouse can be held liable for debts she did not incur herself.
Can I Be Contacted By a Debt Collector?
You know that the FDCPA prohibits debt collectors from harassing you about a deceased person’s debts. Can a debt collector even discuss your loved one’s debts with you without breaking the law? The FTC makes clear that debt collectors are permitted to contact and discuss the consumer debts of a deceased person with the following people in relation to the deceased:
  • Spouse;
  • Parents (when the deceased is a minor);
  • Guardian;
  • Executor; or
  • Administrator.
If another person is authorized to pay debts with assets from the estate of the deceased, the FDCPA also allows debt collectors to contact that individual. However, the FDCPA cannot discuss those debts with anyone else. It is also important to know that, even if you fall under the category of a person authorized to discuss the debts of a deceased person, you have a right to stop debt collectors from contacting you. This can be a demanding process, and it is important to seek legal advice.
If you have questions or concerns about debt collection in connection to the death of a loved one, you should discuss your situation with an experienced Chicago consumer protection attorney as soon as possible. Contact the Emerson Law Firm today.
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