Editorial





Have you lost a relative lately and received a call from someone who says that the deceased, who passed on without settling a debt, would rest easier knowing that the slate had been wiped clean? More companies, among them credit card lenders, banks, finance companies, auto lenders and health care providers, are employing companies that specialize in persuading people to make good on the debts of the dead - though they have no legal obligation to do so.

Last week, the New York Times reported that collecting from the relatives of deceased people has become one of the most successful enterprises in the debt collection industry. Remarkably, relatives of the dead are more likely to pay off a debt than the late debtors once were. Chalk it up to love of the deceased, guilt, the belief that there's a moral obligation to settle the debts of departed loved ones - or the fact that the relative is led to believe that he or she has a legal obligation to repay.

Such debt collection practices are reprehensible, and some almost certainly violate the federal Fair Debt Collection Practices Act, which prohibits the use of misleading statements or misrepresentations when attempting to collect. The industry's vultures - sorry, collection agents - prey on people whose grief has made them vulnerable. Some go so far as to offer to connect people with their in-house master "grief counselors" who will help them deal with their loss. The real point of providing such free services, of course, is to win the bereaved's confidence and get them to pay up.

Some collectors are trained to walk along the edge of the law by their employers. "We definitely tell them they have no legal obligation to pay. But is it disclosed up front - 'Mr. Smith, you definitely don't owe the money'? It's not that blunt," Scott Weltman, a principal in a Cleveland law firm that collects debts told Times reporter Scott Streitfeld.

There are times when a relative can be on the hook for the debts of the deceased - having co-signing a loan, for example, or agreed to accept responsibility for unpaid nursing home bills. The beneficiaries of an estate may also lose out if the deceased had debts because those must be paid out of the proceeds of the estate before inheritances can be distributed. But owe Visa for an uncle's unpaid balance or his unpaid hospital bills? No way. Debt collectors who imply otherwise are manipulating vulnerable people.

Some relatives, if it makes them feel good, may get their money's worth by settling a loved one's debts. But before doing so, they should remember that creditors take the risk that their debtors might die. That's why lenders require borrowers to purchase mortgage insurance. Other lenders factor in the loss from a debtor's death when setting interest rates.

The Concord office of the Better Business Bureau has been getting calls from people who want to know whether they are obligated to pay off a dead relative's debts, so beware. If this ghoulish collection practice continues, the Legislature should require that all such collection calls begin with the explicit notice that the relative has no legal obligation to pay.