“Do I need to file bankruptcy on inherited debt?”
In my twenty years as a bankruptcy lawyer, I’ve been asked about bankruptcy and inherited debt maybe four or five times.
Someone’s mother or father passed away, leaving nothing but credit card and medical bills. What to do? Does bankruptcy help? Most people know that you don’t need to file bankruptcy–because you can’t inherit debt in America. I never thought I’d need to talk about it in my bankruptcy blog.
(Unless you were already a co-signer, collectors cannot come after you for the bills of your mother or father. At least they shouldn’t.)
So I was surprised by a news release posted on the internet March 31, 2011. Debt collector Phillips & Cohen brags about their leadership in collecting “deceased account recovery.” Deceased account recovery?
Now if someone dies and leaves a probate estate, legitimate creditors should be paid. That’s one of the things that Phillips & Cohen says they do, on their website.
They also say they have “effective family … communication.” What’s that???
The Fair Debt Collection Practices Act says that a collector cannot communicate with anyone other that the consumer debtor or spouse or attorney or the credit bureau. The only exception is to obtain “location information.”
So I’m not sure how these people–who are clearly collectors–communicate with family. They aren’t trying to locate someone they know is deceased. Doesn’t any other communication instantly violate the FDCPA?
If a loved one dies and leaves a probate estate, creditors should be notified and legitimate debts should be paid.
But if they leave nothing, you do not inherit the debt. Don’t let anyone tell you that you do.
There’s no need to file bankruptcy.