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Can You Still Collect After A Debtor Has Died?

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When a person dies, they leave behind assets, their legacy and their debts. In general, those debts and assets become part of that person’s estate, which has a responsibility to pay them. The assets that are leftover go to the person’s heirs or beneficiaries. In cases where there isn’t enough money to pay all the debts, they could go unpaid. This can get complicated, however, and there are some things you need to know before you pursue debt recovery in New Jersey against a deceased person.

Can You Still Collect After A Debtor Has Died?

Settling an estate

When a person dies, they may leave behind a will, which names an executor. The executor is the person who is responsible for settling the deceased person’s financial affairs. Without a will, the court will decide who handles the estate. In both cases, there is a pecking order for debt payment priority. Secured debts, such as auto or home loans, go first. Unsecured debts, like medical bills and credit cards, come after that.

Secured debts

With the home, the bank will continue to expect payment for a home loan or they will take further action. There may be legal protection for relatives or other people living there, however. Cars don’t carry the same sort of protection as the auto lender can take the car back immediately if payment stops in many states. Nevertheless, most auto lenders won’t repossess a car if someone is still paying on the loan.

Unsecured debts

Unsecured debts like credit cards or money owed for a smaller product or a service are also handled by the estate. If a person cosigned for the debt, they are probably liable for any debt still owed on it, but those who were just authorized users usually are not responsible.

It’s important to note that relatives usually aren’t obligated to pay the debts of someone who has died from their own personal assets. Federal law also spells out which relatives can be contacted to discuss a deceased person’s debt, as covered by the Federal Trade Commission (https://www.consumer.ftc.gov/articles/0081-debts-and-deceased-relatives).

You can contact the person’s spouse, parents (if he or she was a minor), guardian or the person responsible for the estate. If you contact a third party, such as another relative, you’re generally only allowed to ask for the contact information of a person you can speak to about the debt, and you can usually only contact these third parties one time. Contacting the wrong person is a mistake businesses sometimes make. This can result in penalties, which is why arranging for professional debt recovery in New Jersey may be the safest route.

Even with relatives and estate representatives who can be contacted about the deceased person’s debts, there are many rules that have to be followed. If the person being contacted sends a letter stating that he or she doesn’t want to be contacted any more, the collector must stop. They can’t contact that person again unless it is to confirm the no-contact letter or to advise the person about a specific action that is being taken to collect the debt.