New York Enacts Law To Restrict Collections From Deceased Individuals’ Family Members

Eric Rosenkoetter from Maurice Wutscher has published an article alerting the credit and collection industry to a new law that will go into effect in New York in March that clarifies how collectors and creditors can attempt to collect debts from deceased individuals.

The bill, SB 3491A, was signed into law by Gov. Andrew Cuomo late last month and will go into effect on March 29.

The overall objective of the bill is to ensure that nobody attempting to collect on a debt incurred by an individual who is deceased can make any representation to that individual’s family members that they must repay the debt.

Along with codifying the collection of debts incurred by a deceased individual, the law also sets forth a new definition for “debt collection agency,” at least in the state of New York. A debt collection agency is defined as a person, firm or corporation engaged in business, the principal purpose of which is to regularly collect or attempt to collect debts: (a) owed or due or asserted to be owed or due to another; or (b) obtained by, or assigned to, such person, firm or corporation, that are in default when obtained or acquired by such person, firm or corporation.

Under the law, debt collection agencies and principal creditors are not allowed to make any representation that a person is required to pay the debt of a family members in a way that contravenes with the Fair Debt Collection Practices Act, and are restricted from making misrepresentations about the family member’s obligation to pay such debts.

Rosenkoetter points out that the legislature’s justification for the bill was an article in The New York Times that “described the practices of a debt collection agency whose agents are specially trained to employ ‘empathic active listening’ techniques to comfort grieving families while luring them into paying the deceased’s debts.”