MINNEAPOLIS — The banks need another bailout and countless
homeowners cannot handle their mortgage payments, but one
group is paying its bills: the dead.
Skip to next paragraph Dozens of specially trained agents work on the third floor of DCM
Services here, calling up the dear 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 cell phone 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 phone 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 that people are so scared and so broke it is
difficult to get 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 generally survivors are not required to
pay a dead relative’s bills from their own assets. In
theory, however, collection agencies could go after any
property inherited from the deceased. But sentiment
also plays a large role, the agencies say. Some relatives
are loyal to the credit card or bank in question. Some feel
a strong sense of morality, 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.
(emphasis added)
Scott Weltman of Weltman, Weinberg & Reis, a Cleveland law
firm that performs 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,” said DCM’s chief executive, Steven
Farsht. Despite the delicacy 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.
To listen to even a small sample of DCM’s calls — executives
played tapes of 10 of them for a reporter, electronically
edited to remove all names — is to reveal the wages of
misery, right down to the penny. A man has left credit card
debt of $26,693.77, the legacy of a battle with cancer. A
widow says her husband “had no money. He pretty much just
had debt.” Asked about an outstanding account of $1,084.86,
a woman says the deceased had no property beyond “some tools
in the garage” and an 18-year-old Dodge.
Skip to next paragraph Not everyone has the
temperament to make such calls. About half of DCM’s hires do
not make it past the first 90 days. For those who survive,
many tools help them deal with stress:
yoga classes and
foosball tables, a rotating assortment of free snacks as
well as full-scale lunches twice a month. A masseuse comes
in regularly to work on their heads and necks. Brenda
Edwards, one of DCM’s top collectors, spoke with a woman in
New Jersey about her mother’s $544.96 credit card bill.
“She had no will, no finances, nothing,” the daughter said.
“Nothing went to probate.” The $200 in the checking account
was used for funeral expenses. But the woman also said the
family “filed a form with the county,” indicating that
perhaps there was a legal estate after all. “Is anyone in
the family in a position to pay this?” Ms. Edwards asked,
adding: “I’m not telling you it needs to be paid at all.”
The woman reached a decision. “I will talk to my brothers
and sisters and we will pay this,” she said. Ms. Edwards has
a girlish voice that sounds younger than her 29 years. “If
you plant a seed and leave on a good note, they’ll call back
and pay it,” she said.
DCM started a Web site called
MyWayForward.com
to provide the bereaved with information, tools and, some
day, products. “We will never sell death. But it’s O.K. to
provide things that could be helpful to the survivor,” Mr.
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 Mr.
Frenchman had been planning to pay it anyway, he emerged
from the experience vowing never to get a Discover card
himself.
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. After a week, the relative is
contacted again. DCM executives say some of the 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.” Saying 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.”
Bankruptcy Fraud
◙
HIDING PROPERTY IN BANKRUPTCY CASE BRINGS PRISON TERM
Copyright The Associated Press
(Cedar Rapids-AP) -- A Waterloo woman will spend a year in
federal prison for fraudulently concealing property while
filing for bankruptcy. Sandra Risse was sentenced today in U-S
District Court in Cedar Rapids after she plead guilty in June.
The 40-year-old Risse admitted that after her husband died,
she inherited a car and several motorcycles and placed the
titles of some of them in other names. When she filed for
bankruptcy, she didn't list those vehicles. From 1994 to 2000,
Risse received supplemental Social Security income on behalf
of her son. She claimed she owned only one car and a
motorcycle, which she valued at 500 dollars. Authorities say
the vehicles Risse concealed were worth as much as 50-thousand
dollars. She was ordered to pay the government 32-thousand
dollars in restitution.
◙
WISCONSIN MAN FACES BANKRUPTCY
FRAUD CHARGE
Edward DeBoth, 43, is accused of
concealing money to protect it from creditors during a
bankruptcy action in May 2001, according to a federal
indictment.
Edward and his wife Patricia filed
a bankruptcy petition with the U.S. Bankruptcy Court in
Wisconsin. On the petition, DeBoth stated he had no cash on
hand but in fact had at least $11,500, according to the
indictment.
After the discharge, DeBoth and
his girlfriend deposited $19,000 in his girlfriend's bank
account in small increments, to keep its existence hidden, and
then used it as a down payment on a house in Green Bay, the
indictment says. He's charged with bankruptcy fraud and with
structuring. Each crime carries a penalty of up to five years
in prison.
◙
ATTORNEY'S FAILURE TO SCHEDULE ASSETS
Barger v. City of Cartersville, Ga. (11th Cir. 2004)
The
failure to comply with the Bankruptcy Code's disclosure duty
is "inadvertent" only when a party either lacks knowledge of
the undisclosed claim or has no motive for their concealment.
A debtor who failed to disclose the existence of her
employment discrimination lawsuit during the pendency of her
bankruptcy could not escape the consequences, even if it were
her attorney's error.
Although it is undisputed that Barger's attorney failed to
list Barger's discrimination suit on the schedule of assets
despite the fact that Barger specifically told him about the
suit, the attorney's omission is no panacea. As the Supreme
Court stated in Link v. Wabash R.R. Co., "[t]here is certainly
no merit to the contention that dismissal of petitioner's
claim because of his counsel's unexcused conduct imposes an
unjust penalty on the client. Petitioner voluntarily chose
this attorney as his representative in the action, and he
cannot now avoid the consequences of the acts or omissions of
this freely selected agent." "[I]f an attorney's conduct falls
substantially below what is reasonable under the
circumstances, the client's remedy is against the attorney in
a suit for malpractice. But keeping this suit alive merely
because plaintiff should not be penalized for the omissions of
his own attorney would be visiting the sins of plaintiff*s
lawyer upon the defendant."
MORAL TO THIS STORY - THIS IS
YOUR BANKRUPTCY - IT IS ABSOLUTELY YOUR OBLIGATION TO REVIEW
ALL YOUR DOCUMENTS AND MAKE SURE YOU HAVE DISCLOSED
EVERYTHING.
