USA: Dead men pay no bills, but families often will

. SEATTLE, WA / The Seattle Times / Business & Technology / March 4, 2009 Dealing with Debt Dunning survivors is one of the most promising parts of the industry — even though relatives have no legal obligation to pay. By David Streitfeld, The New York Times MINNEAPOLIS — Banks need another bailout and countless homeowners cannot handle their mortgage payments, but one group is paying its bills: the dead. Dozens of specially trained agents work on the third floor of DCM Services in Minneapolis, phoning the dearly departed's next of kin and kindly asking if they want to settle the balance on a credit card or bank loan, or perhaps make that final utility-bill or cellphone payment. The people on the other end of the line often have no legal obligation to assume the debt of a spouse, sibling or parent. But they take responsibility for it anyway. "I am out of work now, to be honest with you, and money is very tight for us," one man declared on a recent call after he was apprised of his late mother-in-law's $280 credit-card bill. He promised to pay $15 a month. Dead people are the newest frontier in debt collecting, and one of the healthiest parts of the industry. Those who dun the living say people are so scared and so broke that it is difficult to persuade them to cough up even token payments. Collecting from the dead, however, is expanding. Improved database technology is making it easier to discover when estates are opened in the country's 3,000 probate courts, giving collectors an opportunity to file timely claims. But if there is no formal estate and thus nothing to file against, the human touch comes into play. New hires at DCM train for three weeks in what the company calls "empathic active listening," which mixes the comforting air of a funeral director with the nonjudgmental tones of a friend. The new employees learn to use such anger-deflecting phrases as "If I hear you correctly, you'd like ... " "You get to be the person who cares," the training manager, Autumn Boomgaarden, told a class of four new hires. For some relatives, paying is pragmatic. The law varies from state to state, but survivors generally are not required to pay a dead relative's bills from their assets. In theory, however, collection agencies could go after any property inherited from the deceased. But sentiment also plays a large role, agencies say. Some relatives are loyal to the credit card or bank in question. Some feel a moral sense that all debts should be paid. Most of all, people feel they are honoring the wishes of their loved ones. "In times of illness and death, the hierarchy of debts is adjusted," said Michael Ginsberg of Kaulkin Ginsberg, a consulting company to the debt-collection industry. "We do our best to make sure our doctor is paid, because we might need him again. And we want the dead to rest easy, knowing their obligations are taken care of." Finally, of course, some of those who pay a dead relative's debts are unaware they may have no legal obligation. Scott Weltman of Weltman, Weinberg & Reis, a Cleveland law firm that does deceased collections, says that, if family members ask, "we definitely tell them" they have no legal obligation to pay. "But is it disclosed upfront — 'Mr. Smith, you definitely don't owe the money'? It's not that blunt." DCM Services, which began in 1999 as a law firm, recently acquired clients in banking, automobile finance, retailing, telecommunications and health care; DCM says its contracts preclude it from naming them. The companies "want to protect their brand," DCM chief executive Steven Farsht said. Despite the sensitivity of such collections, he says his 180-employee firm is providing a service to the economy. "The financial-services industry is under a tremendous amount of pressure, and every dollar we collect improves their profitability," he said. DCM recently started a Web site called MyWayForward.com to provide the bereaved with information, tools and, someday, products. "We will never sell death. But it's OK to provide things that could be helpful to the survivor," Farsht said. Death will be the end of one customer relationship but the beginning of another. Some survivors are surprised, and a few are shocked, that they are hearing from a collector. Eric Frenchman, an online consultant, said a DCM agent inquired about his late father's $50 Discover card balance before the bill was even due. Since Frenchman had been planning to pay it anyway, he emerged from the experience vowing never to get a Discover card. The major deceased-debt firms say such experiences are rare. Adam Cohen, chief executive of Phillips & Cohen Associates of Westampton, N.J., said his team of 300 collectors "are all trained in the five stages of grief." If a relative is more focused on denial or anger instead of, say, bargaining, the collector offers to transfer him to the human-resources company Ceridian LifeWorks, where "master's-level grief counselors" are standing by. The relative is contacted again a week later. DCM executives say some survivors not only gladly pay but write appreciative notes. They offered up a stack, with the names deleted, as proof. One widow wrote that a collector "was so nice to me, even when I could only pay $5 a month a few times." Noting that money was "so tight" after her husband died, she added: "It was very hard for me, and to get a job at my age. Thank you." Copyright © 2009 The Seattle Times Company