Beware of Bill Collectors Who Come Dressed in ‘Urgent Messenger’s’ Clothing

Q I have been contacted twice by a local department store to deliver a “message� to one of my neighbors. I wasn’t told whom they represented or the nature of the call; they said only that the matter was “urgent,� that they were unable to reach my neighbor and that they needed her to immediately call an 800 number.

I complied with the caller’s requests only to find out later that the call was from a store representative who didn’t have my neighbor’s unlisted phone number and needed to talk to her about the urgent matter of her unpaid bill.

I understand that the law does not permit collectors to identify themselves as such to any person other than the one who has the account. However, how do you think my neighbor felt when she got the message from me? The “threat� of public embarrassment certainly exists. Isn’t that in violation of the “spirit� of the law?

--R.M.

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A Going back to our earliest roots, Americans have been of a mixed mind toward debtors unable to pay their bills.

Our founders clearly believed that being poor and unable to pay one’s creditors was not sufficient reason to throw someone in jail as a criminal. We do not have debtors prisons; our bankruptcy laws are based on giving debtors second chances; bankruptcy filings can be erased from credit records after prescribed periods; and laws prevent the government from discriminating against us for filing for bankruptcy. “The so-called debtor class,� said President Grover Cleveland, “are not dishonest because they are in debt.�

That said, our Puritan heritage also holds that we should pay our own way. Failure to do so is considered a type of cheating that ultimately hurts everyone. Businesses can go under; innocent consumers are forced to pay higher prices so business can cover bad debt losses; our moral fabric will be torn if each of us doesn’t take responsibility for his or her actions.

Balancing these conflicting philosophies has never been easy. The issue you raise--efforts by a business to collect its own money--isn’t regulated by the Federal Fair Debt Collection Practices Act because this law does not cover creditors collecting their own owed funds.

The California Fair Debt Collection Practices Act does cover such efforts. This law allows creditors to contact third parties to find debtors, but it prevents them from identifying themselves as creditors to anyone except the debtors themselves. So the calls you got were perfectly legal and part of a practice that is considered standard among businesses.

However, as Ken McEldowney, executive director of Consumer Action in San Francisco, notes, the law essentially allows a creditor to involve an innocent third party, such as yourself, in its collection efforts. They can’t, by law, tell you who they are or what they want; they can only ask you to help them find the debtor.

Presumably if you knew the true nature of their call, you might not be willing to offer any help. But all you know--and this is if the creditor is completely honest--is that they have an urgent reason for reaching your neighbor by phone. In some cases, neighbors are led to believe that the caller is a long-lost friend or relative or that there is some near-emergency brewing.

What can you do? An extreme solution is the one your neighbor took: get an unlisted phone number. The creditor’s staff was able to reach you through a reverse phone directory that lists phone numbers by addresses; they know where your neighbor lives, and they look for listed phone numbers closest to that address.

More realistically, you can simply “forget� to pass on the creditor’s message. You can simply decide that anyone who refuses to tell you the nature of a call is probably a creditor and someone you don’t wish to aid. Whether you want to tell the creditor that you are taking this position is your decision and one that might be dictated by whether you want the creditor to continue looking for a sympathetic “gopher� on the block.

What Are the Standard Probate Fees for State? Q I’m worried that the bank trust department handling the probate on my grandmother’s estate is spending too much of the money. They say fees are set by the state. What are the standard probate fees in California?

--D.F.

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A Are probate officials the used car salesmen of the professional class? Certainly Charles Dickens turned his pen on them in “Bleak House.� And their reputations may not have improved much in the ensuing years.

Why should it be thus? The purpose of probating a will is exemplary enough: to make sure that estate taxes and debts of the deceased are paid and that the remaining assets are distributed according to law and the wishes of the deceased. But somehow it’s believed that making big bucks for providing this service isn’t right or, at worst, is dirty.

So, in most states, including California, the fees charged for relatively simple probate cases are set by law.

In California, the fees are 4% for the first $15,000 of the estate’s value, 3% for the next $85,000, 2% for the next $900,000, 1% for the next $9 million and 0.5% for anything over that. (OK, some might even argue that those fees are too generous for a simple case, which is why a lot of wealthy people have living trusts. But that’s another issue.)

If probate cases get complicated because assets, creditors or debtors must be tracked down or if the probate process includes offering such extras as tax advice or financial planning, California law considers these services “extraordinary� and imposes no legal limits on the fees. However, in many cases, such extraordinary probate fees cannot be paid without the blessing of the sitting probate judge of the local Superior Court--so there are some checks in the system.

How can you be sure you are being charged correctly?

Doron M. Tisser, a Calabasas attorney specializing in estate law, recommends that you immediately ask the bank for a letter outlining the services it is providing and how it is are charging. (Ideally, you should have gotten this agreement before probate began.) If you don’t like what the letter says, speak up, first to the bank and, if necessary, to your own attorney. (Remember, the bank or probate attorney represents the deceased, not you. If you need representation, you will need to get your own.) Finally, remember that you can challenge any fees in court when the matter finally goes before the probate judge.

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Carla Lazzareschi cannot answer mail individually but will respond in this column to financial questions of general interest. Write to Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. Or send e-mail to [email protected]