Tag Archives: debt

Will you get a call from a debt collector?

debt-deathDid you know that if someone dies with unpaid bills like a balance on a credit card account, a family member or close friend will get a call or letter from a debt collector.

A few years ago, the FTC (Federal Trade Commission) issued new guidelines related to this subject.  The guidelines “widen the universe of people who could receive collection calls or letters”.  This makes it very important that anyone receiving such a call or letter knows his legal rights and obligations.

Debt collectors read the obituaries and then check to see whether the person who just died has any surviving relatives.  If so, they immediately begin sending out letters or making phone calls and harassing them for whatever is owed.

Rules vary from state to state but, in general, here are a few things that usually apply.

  • Family members or friends are not obligated to pay out of their own pockets for debts incurred by a deceased person.
  • If a family member or friend has co-signed a credit card or loan application with the now deceased person, that relative or friend is probably obligated to repay the debt.
  • If the deceased left a will and the estate is in probate, debt collectors can attempt to collect their money from the assets of that estate.
  • Assets that are specifically bequeathed to someone or that were jointly owned by the deceased and another person generally go to that person outside of the estate and are usually not reachable by debt collectors.  In the 10 community property states, assets are generally considered joint property and can’t be touched by a debt collector.

What does this mean for you?  If someone close to you dies and  you are contacted by a debt collector, don’t give that person any information or commit to anything.  See assistance from a local credit counselor or attorney to get guidance on how to proceed.  Otherwise, you may find yourself paying money to a debt collector unnecessarily.

For more information about settling an estate, go to www.diesmart.com.

 

Who Pays Your Debts When You Die?

According tk15365456o a U.S. News and World Report story out this week, most probably your unpaid bills will be subtracted from any inheritance you leave to your loved ones.

In 2013, more than 61% of senior households had an average of $40,900 in debt.  And it’s likely that many will die with those debts unpaid.

If you don’t have any assets, your debts may die with you.  However, if you have assets, your creditors may be able to collect what they’re owed from those assets and the amounts subtracted from what your heirs will inherit.

How debt is handled depends largely on the state in which you are living at the time of your death.  Nine states are “community property” states.  That means your spouse is responsible for any debt incurred during the marriage.  In other states, a spouse is not responsible for bills that are solely in the other spouse’s name.  And some types of assets, such as retirement accounts and life insurance payouts, usually can’t be claimed by creditors.

The story goes on to list six things to do if someone you love has debt when they die:

1)      Consult a probate attorney.

2)      Notify creditors of the death.  Once this is done, those accounts are frozen.

3)      Catalog your loved one’s assets.

4)      Determine what your loved one owes.  That will help determine what, if anything, needs to be sold to pay the debt.

5)      Have beneficiaries file for assets that pass without probate.

6)      File tax returns.  Even after death, tax returns need to be filed on time.

For more information about estate planning and helpful hints on what to do when settling a loved one’s estates, check out our website www.diesmart.com.