According to the Consumer Financial Protection Bureau, sixty-eight percent of consumers have debt collectors who call them attempting to collect debt from a deceased family member. In most circumstances, upon the death of the debtor, the debt is not collectable and cannot be passed down, around, up or sideways to family members or friends.
The few cases where a debt can be collected from a family member are;
Co-signer. This one goes without saying. When someone cosigns for a loan, they are stating they will back up the payments in the situation the borrower cannot. This can be because of a loss of a job, or even death.
If the borrower lives in a community property state which are; California, Arizona, New Mexico, Washington, Texas, Idaho, Wisconsin, Nevada and Idaho, the spouse could be held responsible for the debt in case of the death of the borrower.
If the borrower or debtor has a trust account or assets, the money can at times be taken to pay down debt. However; this holds true only for first party accounts. Collection agencies (other than the 2 cases mentioned above) do not have the ability to collect the debt from anyone else after the death of the debtor.
If a debt collector is attempting to collect a debt that you are unsure of or is from a relative which you did not cosign for, do not pay it and do not set up payment arrangements. The first thing you need to do is request the validation of debt. Make sure that when you request the validation of debt you receive the contract and/or proof with your signature. If the collection agency does not respond within 30 days of the date they received your letter, that debt is deemed uncollectible according to the Fair Debt Collection Practices Act.