The credit industry has discovered a new goldmine:  collecting debt from the dead.  With multitudes of Americans falling farther and farther behind with their mortages, credit card payments, and bills for bare essential living items like electricity and water, the credit industry has begun to turn more attention to the recently departed, who apparently have been a long-marginalized collection demographic. 

The New York Times reports that debt collection from the dead is getting more and more attention from collection agencies, and it’s paying off nicely (www.nytimes.com/2009/03/04/business/04dead.html?em).  These collection efforts have been aided greatly by advances in technology in the nation’s court systems, particularly in the probate courts where one can learn quickly when estates are opened, although the efforts are just as enthusiastic in instances where no estate exists. 

Companies and services involved in debt collection have apparently figured out that, in this economy at least, collection from the dead nets a higher rate of return than it does from the living.  To capitalize on this phenomenon, companies like DCM Services in Minneapolis now provide specialized training to staff on the front line of this sensitive – some would argue insensitive – dunning effort.  Collectors learn about the five stages of grief – important stuff to know when I guess it’s the bargaining stage they’re hoping to catch you in.  Staff are also trained how to employ “empathic active listening” which is a civilized name for a method of speaking gently and seeming to offer comfort while staying attuned for any shred of information on who they can find that will commit to payment.

No one is immune from that ugly phone call:  the newly widowed or the grieving son, the wealthy or the poor.  Interestingly, payment often comes from people who have no legal obligation whatsoever for the deceased’s debts.  Whether out of a sense of duty or pride or responsibility or dignity or even guilt, relatives and friends often come up with the money to discharge their loved one’s debt.

Don’t get me wrong, in order for the world economy to get back on its feet, people need to pay their debts.  But there’s something particularly repugnant about an entire industry investing serious thought and money into effective debt collection from people at their weakest and most vulnerable moment, while ignoring obvious fixes to their own industry practices.  What do you think?

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