In general, people are responsible for paying their own debts. The only time an individual could be called to the carpet to pay for debt someone else incurred is if that individual agreed to cosign for it or the debt was jointly owned. However, a peculiar case in Pennsylvania has uncovered an obscure law that allows creditors to go after family members for unpaid debts. Here's more info about this scandal and what you can do to protect your loved ones.

Relative's Liability Procedure

The trouble started when healthcare providers in Lehigh and Northampton counties hired a local law office to collect medical debt. The law office sent letters to the debtors' family members demanding payment based on the Relative's Liability Procedure statute that's still on the books.

This law stipulates that the spouse, child, or parent of an indigent person is responsible for caring for and financially helping the individual if the spouse, parent, or child is financially capable. A creditor could, theoretically, sue a debtor's family members and obtain a judgment for the money owed using this law.

However, the law office appears to have misled the recipients of the dunning notices into believing they were responsible for the debts. The Attorney General also claims the law office failed to sufficiently determine if the debtor was truly indigent or that the relatives could pay, two things that must be proven before the law can be applied. Some of the people affected appear to have also suffered black marks on their credit reports because of the lawyer's misapplication of the statute.

The Attorney General is currently suing the law office for these alleged violations.

Protecting Your Loved Ones from Rogue Creditors

The majority of the time, reputable creditors will not try to squeeze money out your friends or family members unless those people are legally obligated to pay the debt in some way (e.g. cosigned on a car loan). As demonstrated, there are some creditors who will go to great lengths to collect on a debt, even going so far as to use obscure laws to get the money owed.

Your best defense is knowledge. If your family member receives a notice stating he or she is responsible for a debt you owe, use the Internet to look up the statute the creditor is relying on. Chances are good the creditor is banking on your ignorance to scare you or your loved one into paying the money. Responding to the notice with information about the law, why it doesn't apply in your situation, and the penalties associated with attempting to illegally collect on a debt should be enough to get the creditor to immediately stop the unwarranted harassment.

Contact the Attorney General's office in your state and/or the Federal Trade Commission about any questionable collection tactics a creditor may be using. The Fair Debt Collection Practice Act provides a long list of what creditors are allowed to do to collect debts, and companies who violate the rules can be sued and sanctioned. If a particular company receives multiple complaints, these organizations will investigate and take action if necessary. At the very least, notifying an unethical creditor that you have reported the company for its illegal actions may get the creditor to back off.

If you're struggling to pay off a lot of debt that's causing you or your family members to be harassed by collection agencies, filing for bankruptcy is a good way to stop it. When a bankruptcy is active, debt collectors must cease any and all collection activities until the case concludes. If the debt is wiped out via a bankruptcy discharge, the creditor cannot continue pursuing collection at all.

It's a good idea to talk to an attorney about bankruptcy law for more information about filing chapter 7 or 13 or what your rights are when dealing with creditors.