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Creditor harassment: Who is responsible for a parent's debts?

Consumers in New Jersey who don't know their rights could be conned into paying the debts of a deceased relative. The fact that the debts were solely in the name of a deceased parent may not stop creditor harassment, even though creditors cannot legally hold the children accountable. However, some debt collection agencies are ruthless, and they will send letters and make phone calls to coerce, bully and entice children to pay the debts anyways.

When probate proceedings are initiated, the law dictates the order in which debts must be paid. During these proceedings, credit card companies are not allowed to pile on additional fees or penalties. However, if a person signs documents to assume the debts of another person, that individual may be responsible for the full amount that is outstanding. Moreover, joint credit card accounts -- such as those shared between spouses of business partners -- typically mean joint liability, even if one party dies.

Creditors may also claim that retirement plans and life insurances are included in the probate estate and that they are entitled to payment from those funds. That is not true as these funds go directly to the named beneficiaries. Consumers may want to structure their financial affairs in a manner that will not jeopardize the financial stability of their loved ones who are left behind.

New Jersey residents who are experiencing creditor harassment may benefit from consulting with an experienced attorney who can explain their rights and protect them against ruthless debt collection tactics. Individuals who find themselves responsible for debts on jointly owned credit cards may seek advice from an experienced bankruptcy attorney to find suitable remedies for such circumstances. The U.S. Bankruptcy Code offers options that are designed to put an immediate stop to creditor harassment.

Source: thespectrum.com, "When it comes to creditors, know your rights", Bo Bingham, March 31, 2016

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