When a debtor dies, that person’s financial obligations may carry over to his estate or co-borrowers. But even if the debt expires with the deceased, the campaign to collect it lives on.
A specialized niche within the debt collection industry has arisen in recent years focused on persuading, cajoling and sometimes intimidating surviving relatives into settling up for the decedent’s debts, even if they have no legal obligation to do so.
These companies frequently contract with major lenders like banks and consumer loan companies to put the squeeze on a deceased debtor’s heirs without inflicting public relations damage on the institution. One of the largest agencies proclaims its mission to “protect our clients’ brands and maximize their recoveries” by isolating the financial institution from the collection process.
To be sure, creditors have an obligation to their shareholders to make every legitimate
effort to secure repayment of debt, even after the borrower dies. If a loan is co-signed or jointly made (like a mortgage or joint credit account), the responsibility to satisfy the obligation passes to the surviving party. If no other borrower is responsible, the decedent’s estate assumes the debt and the responsibility to repay.