What the New FTC Policy Does
The FTC’s new policy clarifies a number of issues related to the collection of debt from the estate of someone who has died, and also clarifies when the FTC will take action against a collection agency for contacting individuals other than those that the Fair Debt Collection Practices Act (FDCPA) specifically says can be contacted about a debt owed by a deceased person. Additionally, it tells collectors how to go about trying to identify and find the individual who has the authority to pay a deceased person’s debt.
Keep in mind, the FTC’s guidance only applies to debt collectors covered by the federal Fair Debt Collection Practices Act. It does not apply to creditors attempting to collect their own debts. In those cases, state laws may offer additional protections.
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Here are highlights of some of the most important points in the new policy issued by the FTC:
• Although the FDCPA says that debt collectors can only contact the spouse, parent (if the deceased is a minor), guardian, executor or administrator of a deceased person about a debt owed by a deceased person, the new policy says that the FTC will not take action against a debt collector who communicates with some other person who has the authority to pay the debts of the deceased out of the deceased’s estate.
• When a debt collector does not know who has the authority to pay the debts, the collector may contact others to try to identify who that person is. However, when he does, the collector is not allowed to discuss the debt with others. He can state that he is seeking to identify and locate the person with the authority to pay any outstanding bills owed by the deceased person out of his estate, but he can’t go into any more detail at that point.
• Once a collector has identified the person responsible for paying the debts of the deceased, the collector may communicate only with that individual about the debt he wants to collect.
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• When a debt collector contacts the person with authority to pay the deceased’s debts, the FTC suggests that the collector make it clear to that individual that she is not personally liable for the debt the collector wants paid.
• A debt collector should not ask questions about the assets in the deceased’s estate in an effort to mislead the person with the authority to pay the debts into believing incorrectly that those assets are subject to the collector’s claim. Once the collector has reason to believe that a particular asset is not part of the estate, he should stop asking questions about those assets.
• Finally, in determining whether a collector gives anyone the impression that they are personally liable for the deceased’s debts, the FTC says that it will consider whether the collector obtained an acknowledgment when the first payment on the debt was made that, if appropriate, the person understands that he is obligated to pay the debts of the deceased only with the deceased’s assets, and is not legally obligated to use his own assets—including those that may be jointly owned with the deceased—to pay the debts.
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