FTC Seeks To Clarify Federal Law On "Deceased Debt" Collections
October 04 2010
By : Darren Waggoner, Collections & Credit Risk
The Federal Trade Commission wants public comment on a proposed policy statement clarifying when the FTC will take action under the Fair Debt Collection Practices Act and the FTC Act against companies trying to collect the debts of deceased consumers.
In collecting these debts, the FDCPA generally allows collectors to contact only the decedentís spouse, or the executor or administrator of the decedentís estate.
State probate laws since the FDCPA was enacted in 1977 have expanded the types of individuals authorized to pay a decedentís debts from assets in the decedentís estate - beyond the categories expressly permitted under the FDCPA. In the proposed enforcement policy statement issued today for public comment, the FTC seeks to reconcile the law's requirements with state probate law developments.
The proposed policy statement provides guidance about what collectors must do to identify persons with whom they may communicate about paying the decedentís debt without improperly revealing the debt to others. In addition, the statement emphasizes that, in communicating with someone who is authorized to pay the debts from assets of the decedentís estate, collectors must avoid creating the misleading impression that the person is personally liable or could be required to pay using his own assets or assets held jointly with the decedent. The proposed statement notes that to avoid this misleading impression collectors may have to disclose that this is not the case.
The FTC, under the proposed statement, would not take legal action alleging that a collector violated the FDCPA by communicating about the decedentís debts with the decedentís spouse, the executor or administrator of the decedentís estate or anyone else who is authorized to pay the debts from assets in the decedentís estate.