Requires disclosure by principal creditors and debt collection agencies of the legal obligations of a deceased debtor's family and household members

BILL NUMBER:S2032

Title of bill

An act to amend the general business law, in relation to disclosure by principal creditors and debt collection agencies of the legal obligations of a deceased debtor's family and household members

Purpose or general idea of bill

This bill would require that debt collection agencies that are attempting to collect outstanding debts of deceased. individuals from surviving family and household members inform them, both orally and in writing, that they are not legally obligated to repay the debts of the deceased.

Summary of specific provisions

Section one amends the general business law by adding a new section 601-a. This section requires that all principal creditors and/or debt collection agencies must disclose to any relative or household member of a deceased debtor that is contacted that he or she may not be legally required to repay such deceased debtor's debts. This disclosure must be made both orally and in writing. Any aggrieved person may bring an action against such a practice and recover a civil penalty. Class actions to recover damages are specifically authorized.

Section two amends section 600 of the general business law by adding a new subdivision 4. This section defines 'debt collection agency'.

Section three sets out the effective date.

Justification

Recent investigations have shown that debt collection companies often pursue payments from relatives of deceased debtors. A New York Times article 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. This may be a violation of the Fair Debt Collection Practices Act since this law prevents collection companies from contacting anyone other than the debtor about outstanding bills. Even if this practice is not illegal, this legislation will ensure that debt collectors are required to notify the relatives or household members that they contact that they have no legal obligation to pay off the debt of the deceased. As it stands, all relatives of deceased debtors are not required by law to assume self loved ones' debts but collection agencies often omit this information when they ask the relatives to make payments on outstanding bills.

Prior legislative history

2009-10: S.5046A - Referred to Consumer Protection

Fiscal implications

None.

Effective date

This act shall take effect on the ninetieth day after it shall have become law.