The period of time after the death of a loved one is heartbreaking and challenging enough without having to deal with harassment by debt collectors. Many Oregon residents may wonder what happens to debt after the death of a parent, child, spouse or other relative. Does the debt pass on to the next available relative, who is then required to pay it off?
In an attempt to collect a debt, some collection agencies might make it seem that way when contacting grieving relatives, says Bankrate. However, in most cases creditors are not allowed to pursue the collection of credit card debt or other debt left behind by a deceased family member.
According to the Federal Trade Commission, the Fair Debt Collection Practices Act protects family members from debt collection practices that are abusive, unfair or deceptive. This includes the following actions:
- Threatening legal action or suing family members for a deceased’s relative’s debt
- Telling a relative that he or she is responsible for the debt left behind
- Pursuing collection action against a family member with the same name, such as son with the same name as his father
This does not mean that all debts will go unpaid after a family member’s death. Outstanding debts are paid from the deceased’s estate, which is usually handled by a family member or executor. Creditors are allowed to contact third parties only once to get information on the person authorized to pay debts, but are prohibited from disclosing information about the debt. One of the only times a relative may be held liable for the deceased’s debt is if he or she co-signed on the account.