When Debt Follows Family After Death, Bankruptcy May Help

Many people believe that once they die, their debt dies with them. But credit card companies and lenders aren't so forgiving.

They will go after the person's estate and could try to cut into the assets that have been left behind for surviving family members. Ultimately, the debt may be passed on from the dying family member to his or her closest relatives, if there are connections like a co-signed loan or business partnership.
For these people who live in northern Georgia, it's possible that Atlanta bankruptcy protection can help. If you are thrust into a position of having to bear another person's debt because of death, filing for bankruptcy will allow you to get space from creditors and protect your finances.

If you are a Georgia resident having trouble with your money and don't know where to turn -- whether because of debt from a loved one who died or debt because of job loss, medical bills or high interest and fees from credit card companies -- consulting with an experienced Atlanta bankruptcy lawyer is an option to consider.

Getting sound legal advice about bankruptcy could be crucial at a time when you aren't sure what step may be right. Debt can cause many family problems, and it can be difficult to get out of its grasp once you are too deeply in.

A recent Wall Street Journal article looked at the saga of a Cape Coral, Fla., woman whose husband died of colon cancer in 2010. The 68-year-old, a retiree, was getting up to 10 calls a day from collection agencies, asking for money to pay off a credit card. They said her husband owed more than $16,500 on a credit card.

The sneaky debt collection agency employee told the woman she wasn't obligated to pay, but then told her there were things she could do to "get this taken off your plate." The woman said she had nothing after having sold assets to pay for medical bills and the cost of a funeral. She said she had $2,000 left in life insurance proceeds. She offered that up.

The article goes on to say that in some cases, surviving family members have a legal obligation to pay debts, unless they are a co-signor on a loan. A recent trend has shown that debt collectors have resorted to harassing survivors in order to try to get a portion of the money that the loved one owed.

They try to tell them there is a moral obligation to pay, especially if they benefited from the money spent. Creditor trade groups say that going after what is owed helps other older borrowers because the more creditors get stiffed when a person dies, the less likely they are to lend out money to older borrowers in the future.

Banks tend to farm out this work to debt collection agencies so the banks don't have to be the ones to call grieving widows and widowers asking for money.

There aren't definitive statistics on the death debt collection industry, but the article opines that court records show it's growing. Statistics show that in 2007, the median debt level for Americans between 65 and 74 was $40,000, up from less than $30,000 in 2004, about $15,000 going back to 2001 and 1998 and a huge leap from $8,000 in 1992.

Because of lower retirement savings, a poor real estate market, dropping house values and high unemployment rates, more people are swimming in debt than ever before. Experts believe that debt collectors are trying to profit when people are at their most vulnerable.

Thinking they can pay off some money in order to make the calls stop seems like a smart investment when they have just lost a loved one and don't know how their new life will be without them. But it's unlikely that one payment will do the trick.

If you need to speak to an Atlanta bankruptcy attorney call the DebtStoppers Bankruptcy Law Firm at 800-440-7235 today for a free debt analysis.

More Blog Entries:

Debt Settlement May Be Ideal, But Difficult While Atlanta Bankruptcy Works: November 21, 2011

Additional Resources:

For the Families of Some Debtors, Death Offers No Respite, by Jessica Silver-Greenberg, The Wall Street Journal

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