New state law restricts debt collection efforts after a death
When a New Yorker dies, does their debt die with them? Not necessarily. However, that doesn’t mean that surviving family members are responsible for it.
Nonetheless, some creditors and debt collection agencies have aggressively gone after surviving family members to collect money owed by a loved one when they passed away. According to Secretary of State Rossana Rosado, “Dishonest companies are contacting grieving family members and pressuring them to pay debts they do not legally owe.”
Others have used the tactic of providing sympathy for their loss with the goal of eventually getting family members to pay off the debt.
Things are changing in New York. Governor Andrew Cuomo has announced a new law that places restrictions on what debt collectors can do or say when it comes to next-of-kin of deceased people who owed money to them. Under the new law, creditors and debt collection agencies cannot tell surviving family members that they are responsible for their loved one’s debt. Moreover, they’re now required to inform them that they have no legal obligation to repay the debt.
In discussing the new law, Gov. Cuomo said, “Grieving New Yorkers should not have to suffer the indignity and insult of being hounded by unscrupulous debt collectors. This new law puts debt collectors in check and creates important consumer protections that make it clear that an individual’s surviving family members are not obligated to pay their loved one’s debts.”
One New York legislator expressed her support for the new law, saying, “After struggling through the pain of losing a loved one, surviving family members should not be forced to endure the relentless bullying of misleading and predatory debt collectors. Here in New York, we will not tolerate this kind of behavior.”
Even with this new law in place, when someone dies deep in debt, their loved ones are left to deal with it, even if they can’t be personally held responsible for it. No one wants to put their loved ones through that.
While most of us don’t expect to die any time soon, we can’t know what the future will bring. If you’re struggling unsuccessfully to get out from under your debt, it may be worthwhile to consider the option of bankruptcy. This can help you get a fresh start financially and help ensure that your loved ones won’t have to deal with creditors and collectors.