The Grim Reaper

Yesterday’s New York Times had a disturbing article about how successful collection agents “trained in the five stages of grief” are in collecting the debts of the deceased. These agencies aren’t operating through the probate process. Instead, they are collecting from the deceased’s relatives, who have absolutely no legal obligation to pay the debt. It’s true that for some of these relatives, the amount of their inheritance would be reduced by whatever was owed to the creditor. It’s also true that some individuals may believe that they are honoring the memory of the deceased by settling all outstanding obligations. But,

[S]ome of those who pay a dead relative’s debts are unaware they may have no legal obligation.

Scott Weltman of Weltman, Weinberg & Reis, a Cleveland law firm that performs deceased collections, says that if family members ask, “we definitely tell them” they have no legal obligation to pay. “But is it disclosed upfront — ‘Mr. Smith, you definitely don’t owe the money’? It’s not that blunt.”

Well, it should be. And apparently I’m not the only one who thinks so. The Times article is currently number 1 on the “most-emailed “ list and many of the more than 200 reader comments are calling for regulation. You only have to read a couple of accounts of an unemployed son-in-law agreeing to assume credit card debt that is not his own or of a widow struggling to pay $5 a month before deciding that such regulation is already past due.

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6 Responses

  1. A.W. says:

    So let’s see here. we want to

    1) crush any chance anyone will pay a debt out of simple moral obligation.

    2) protect those who are too stupid to ask the basic question: “am i legally obligated to do this?”

    3) create an even greater incentive for credit card companies, utilities, etc. to want to cut off credit for those who are about to die.

    You know because when a credit card company discovers that a card holder went on a $45,000 shopping spree, because he figured “f– it, i am dying” that not only is it impossible to force the relatives to pay, but we want to make damn sure that if they are decent and/or stupid enough to pay, that we prevent them from doing that. Because hey, who cares if the corporation is hurt, a bank loses money, etc. who needs them?

    All this in the middle of an epic credit crisis. nice. But hey, who cares about fairness to companies, or keeping the economy out of the crapper. the NYT wrote a story about weeping widows!

  2. Sarah Waldeck says:

    We could probably have a long discussion about whether anyone has a moral obligation to pay off a debt that she did not incur. But what the regulation says determines what it crushes. I don’t see how the statement “You are not legally obligated to do this” deters those who are acting for moral reasons.

    I would also use the phrase “legally unsophisticated” where you chose the word “stupid.”

    Finally, it isn’t clear to me how credit card companies and utilities will know a person is about to die, unless they are simply looking at the correlation between age and the chances of dying a natural death. And I have a hard time believing that the possibility of collecting from a relative who is not legally bound to pay encourages companies to extend credit when they otherwise wouldn’t.

  3. A.J. Sutter says:

    Thank you, Sarah, for a far superior reply to A.W. than I was tempted to give.

  4. A.W. says:

    Sarah,

    1, yes it will crush the desire to do so out of moral obligations.

    2, yes it is stupid to fail to ask the question. sorry, but yes.

    and 3, there are ways to find out.

  5. A.W. says:

    And i will add, i am sick and tired of this endless nanny statism, where we crush our freedom all in the name protecting people from their own stupidity.

  6. Jeff Sovern says:

    There’s at least an argument that the failure to make such a disclosure violates the federal Fair Debt Collection Practices Act, as I discuss on the Consumer Law and Policy Blog at http://pubcit.typepad.com/clpblog/2009/03/does-federal-law-bar-collecting-debts-from-the-dead.html