Debt collections from the dead

Last fall we reported on “Debt Collectors Gone Wild” where debt collection calls included threats of intimidation and even violence in some cases.  It seems that some debt collectors will continue to resort to any tactic, even those that are illegal, in order to collect on a debt, even if the debtor is dead.   Verbal abuse, phony lawsuits, and constant intimidation are just some of the techniques the banking industry uses to illegally pursue widows and grieving family members for the debts of deceased loved ones – debts that they don’t even owe. According to CreditCardAssist, a leading proconsumer financial advocacy group,  these instances are actually widespread practices.  Apparently national exposure in trusted magazines and business journals like the Washington Post as well as fines by the FTC aren’t stopping them, maybe changes in the laws as demanded by consumers can.

When Karyn Howard’s father passed away in 2008, she was convinced that it would be one of the hardest things she’d ever have to deal with. Little did she know that a call from Bank of America a few days later was about to make the ordeal much, much worse.

“It was the absolute worst phone call of my life,” she says. “The bank knew that there was a death and that he had no estate. The debt collector started screaming at me, saying she would call me every day until I paid the debt. And then over and over again, each time I told her to stop calling me, she kept screaming in a ‘Friday the 13th’ kind of voice: ‘Every day, every day, every day!’ I burst into tears and sobbed in front of a client.”

Karyn’s father owed money on a pickup truck he had purchased a few years prior. When he passed, Bank of America repossessed it. However, the truck’s value wasn’t enough to clear the balance in Karyn’s father’s name, so the bank sent debt collectors after his survivors.

“Apparently, they read his obituary, found my grandmother and called her. My grandmother sang like a canary, happy to have someone to talk to, and she gave them all kinds of information, including how to find me.”

A collection agency working on behalf of Bank of America began calling Karyn continuously, both at home and at the vineyard where she worked as an events coordinator. Over the course of two months, the collector belittled Karyn, threatened her with lawsuits and insulted her late father. Though she begged the representative to stop, the calls only got more persistent. Finally, Karyn was forced to seek legal help. Her attorney had to send two letters threatening to sue for harassment before the calls stopped for good.

According to Credit Card Assist CEO Bill Hazelton, “When you die, your debts are forgiven by the state, but that doesn’t seem to matter to the banking industry.” “Grieving family members are being bullied into paying money they don’t owe. It’s illegal in the worst kind of way, and everyone knows about it, and nobody is doing anything to make it stop.”

In the Wall Street Journal, Tony Lloyd, a former manager for debt collector DCM Services LLC of Minneapolis, says the benefits of using death-debt collectors are clear. “The big selling point is that these collectors offer banks a cushion that shields them from actually having to do the gritty work of going after dead people’s families.”

The WSJ also reports;

“But debt collectors have found a way to help lenders get their money anyway. Working on behalf of financial giants from Bank of America and Capital One Financial Corp.  to Discover Financial Services  and Citigroup Inc.,  collection firms target survivors who might agree to pay at least part of what the dead person owed.  Debt collectors say the survivors have a moral obligation to pay, especially in cases where they benefited from purchases rung up by someone else. “

Collectors are willing to “help” survivors deal with the debt by offering to accept a lump sum payment, setting up payment plans or even taking the next income tax return.  Families in grief often agree to these alternatives, not realizing that they are not necessary.

Anyone with a credit card in their name should be pushing for legislative reform to stop this illegal practice before it goes viral. At the very minimum, the “cool down” period that the FTC shrugged off should be imposed. In every state, not just some of them, collection agencies should be forced to inform the families of the deceased, before they ask them for contributions, that they aren’t legally obligated to pay a debt. A verbal request to cease and desist should constitute a legal kill switch on collector calls to grieving family members.

Unfortunately none of these methods are in place to protect consumers.   Maybe they should be.


Excerpts used by permission from