You do so in good faith when you extend credit to someone to purchase a product or service from your business. The expectation is that they will repay the debt.
However, if the debtor passes away before the debt is repaid, you may wonder what rights you have to collect. There are specific rules, and knowing what they are will ensure you don’t engage in illegal debt collection practices.
Relatives of a deceased debtor
When someone dies, their debts don’t just go away. The person’s estate will pay the debts.
The law states that relatives are not required to pay a deceased person’s debts unless certain situations are in place. Situations where a relative of a deceased debtor may be liable for their debt include if they co-signed the obligation or if the person was responsible for resolving the estate and didn’t follow the proper rules.
Rights you have when trying to collect a deceased person’s debts
The law has protections in place for family members from debt collectors who attempt to use deceptive, unfair or abusive methods to collect a debt. While this is true, as a debt collector, you have the right to contact and discuss the deceased person’s debt with their spouse, guardian, parent, administrator or executor.
Relatives can request that you stop contacting them about the debt. If this is done in writing, you must follow the law.
Filing a lawsuit to collect a deceased person’s debt
Even if you are asked to stop contacting family members about a debt, you can file a lawsuit to try to collect it. Knowing your legal rights will help ensure that you follow the rules and avoid any illegal debt collection practices.