A few weeks back, I read a story about a rather chilling experience someone recently had with a large credit-card issuer.
It's no secret that large banks are shameless when it comes to shaking down customers, but this was particularly ruthless even by their standards -- upon receiving a call that a credit-card holder had died, the bank (which I will not identify, as I cannot find the original source material) attempted to talk a relative into paying off the balance... even though the relative was not on the account, and had no legal obligation to pay.
Unfortunately, it appears that was no fluke. From today's New York Times, one of the boom businesses of the Great Recession -- shaking down grieving relatives for the debts of the deceased.
Dozens of specially trained agents work on the third floor of DCM Services [in Minneapolis], calling up the dear departed’s next of kin and kindly asking if they want to settle the balance on a credit card or bank loan, or perhaps make that final utility bill or cellphone payment.
The people on the other end of the line often have no legal obligation to assume the debt of a spouse, sibling or parent. But they take responsibility for it anyway.
"I am out of work now, to be honest with you, and money is very tight for us," one man declared on a recent phone call after he was apprised of his late mother-in-law’s $280 credit card bill. He promised to pay $15 a month.
And why would someone with absolutely no legal obligation want to stretch their dwindling income to pad a bailed out bank's bottom line?
"In times of illness and death, the hierarchy of debts is adjusted," said Michael Ginsberg of Kaulkin Ginsberg, a consulting company to the debt collection industry. "We do our best to make sure our doctor is paid, because we might need him again. And we want the dead to rest easy, knowing their obligations are taken care of."
Translation: No, you're not legally obligated to pay us, if your name isn't on the account. Yes, legally our only recourse is to seek repayment from the estate. But do you really want your deceased mom/dad/aunt/uncle/sister/brother to agonize in the afterlife about the fact that you stiffed BofA a hundred bucks?
It takes a lot to shock me when it comes to the financial sector these days. But this one makes me nauseous. This is sick.
What, $750 billion in taxpayer money wasn't enough? You have to prey on the emotions of the grieving now?
It's hard to think straight when you're confronted with the death of a loved one. But if you get a call like this, remember -- unless your name is on the account, you do not owe that bill collector one plugged nickel.
But don't take my word for it... here's what one credit card marketing site says:
When you die, your estate is responsible for paying off the balance. If the estate goes through probate, your administrator or executor will look at your assets and debts and, guided by law, determine in what order bills should be paid. Remaining assets will be distributed to heirs by following your will (if you have one), or state law (if you don't).
If the assets don't cover the bills? "If there isn't enough money, credit card companies would have to, as my students say, 'suck it up,' " says Doug Rendleman, law professor at Washington and Lee University.
Creditors are notified that the estate is insolvent. They write off the bills, and often that's the end of it. Children, friends, or relatives can't inherit debt. A card company can't legally force someone else to pay.
If you ever have the misfortune of receiving one of these shakedown calls, remember this -- if your name isn't on the account, you are not legally obligated to pay.
And if they try to guilt you into it? Ask yourself this: Would your relative really be pleased to see you spending your hard-earned money to enrich a bailed-out bank on their behalf?
Don't let them scam you. Tell that bill collector to go to hell.