Plight of the Living Dead: What to Do If You're Officially RIP

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In just a few weeks, the dead will walk the streets. Zombies, ghouls and vampires will mingle with the living. We'll give them candy, smile, and then sleep peacefully, knowing that they're fictional.

But beware: There are actual real live dead people walking around America right now. Every day. Thousands of them. And you could be the next to join their ranks.

These troubled undead are suffering from a horror that's nearly as scary as zombie-hood, and almost as hard to recover from.

They've been declared deceased by their banks, their creditors, and sometimes, by their government. It happens a lot more often than you'd probably guess -- unless it has happened to you. Out of the 2.8 million U.S. death reports received each year by the Social Security Administration, one in 200 is incorrect, averaging 38 mistaken deaths a day, according to CNN Money. And unfortunately, a quick call to your bank or the SSA likely won't resolve the issue.

Whenever someone in this country is declared dead, a quiet machinery goes to work behind the scenes. Government agencies, banks and businesses reclassify the deceased in their files, a move intended to prevent hackers from running amok on people's finances postmortem. Databases like the Social Security Administration's Death Master File lock down your Social Security number, name, birth and death dates and final ZIP code.

But what if you're one of the 1,000 people mistakenly declared dead by a creditor every month? Or one of the 14,000 people wrongly declared dead each year by the Social Security Administration. Or misidentified as deceased by your bank, which then blocks you from conducting your daily financial business.

Then, my friend, you'll have to battle your way back to life.

How Do Banks and Creditors Falsely Report Your Death?

Victims of false death reports sometimes make the news, as they suffer from the consequences of human or technological error for years on end.

"The error can take place from either a person hitting the wrong button or from a computer glitch that reports the account is deceased," said Alexis Moore, cyber-crime expert and author of "Cyber Self-Defense." When that happens, it can affect other entities that track your identity, such as the Internal Revenue Service, the Department of Motor Vehicles and licensing agencies. Consider these cases:

  • Kimberly Haman filed a federal lawsuit in February after trying for more than a year to prove she was alive to her bank and Equifax (EFX). Her "deceased" status caused the Missouri resident a great deal of trouble in refinancing her mortgage and getting a credit card.
  • Bank of America (BAC) mistakenly designated customer Arthur Livingston as dead for three years, despite his account being active on a daily basis. Because of that, the South Carolinian couldn't get a mortgage.
  • Laura Brooks of Virginia, according to CNN Money, realized she had been falsely declared dead in 2000 when she stopped receiving her disability checks and her rent and loan payments were bounced.
"Many times folks don't realize it until they get denied credit or have an account closed," Moore said. "Getting through to security departments and those who can help them correct the issue is nearly impossible because those that work in financial institutions, for the IRS and credit bureaus don't understand or realize the query is about the person being falsely reported dead."

So what can you do if this happens to you?

6 Steps to Clear Your Name and Prove You're Alive
  1. Find the source of the mistake. A county clerk's office, health insurance company or family member could be the reason for an incorrect death report. Confirm whether a death certificate has been issued. If so, you'll have to provide documentation and have the certificate amended. Moore recommends gathering your financial records, tax returns, birth certificate and social security card during this initial stage.
  2. Inform Equifax, Experian (EXPN) and TransUnion of the error. "Credit reporting companies must investigate the items in question -- usually within 30 days -- unless they consider your dispute frivolous," the Federal Trade Commission says.
  3. Keep a record of all correspondence regarding your claim. It's important that you document every phone call, letter sent and online inquiry as the process unfolds. Noting the date and time of your conversations, claim numbers and names of representatives who assist you will help you keep all parties accountable throughout the investigation.
  4. Follow up with the entity that falsely claimed you were dead. The Motley Fool recommends being clear about what you want fixed and the potential reason for the mistake.
  5. Request lost benefits or take legal action. If you didn't receive your Social Security benefits due to this error, you have a right to those funds. Legal action can be taken against companies unwilling to provide you with that back pay. And this kind of error can cost a victim big time, in the form of bounced check fees and lost income. At the least, the Motley Fool recommends attaching a letter to your credit file explaining this error for future reference.

"Plan on this becoming a second full-time job because that is what it takes to overcome being falsely reported deceased," Moore said. "Often clients will also require licensed attorneys and law enforcement involvement, depending upon the individual's circumstances. This is worse than what identity theft victims experience because, when reported deceased, the accounts get archived and shut down, making it difficult to reestablish."

Precautionary Steps to Take

There isn't much you can do to prevent a credit bureau from confusing you with someone with a similar name or identification number. However, there are some steps you can take to prevent this error from occurring due to your own inattention.

  • Widows should request a copy of both their own and their spouses' credit reports after a death to make sure that everything checks out, as a mistake could occur due to marital association of information, TransUnion Vice President Clifton O'Neal suggests.
  • Exercise caution when filling out medical discharge paperwork. It was a mistake on those forms that led to Bea Cohen being falsely reported dead for years, impairing her ability to obtain credit. One would hope that a hospital would check over the forms for inaccuracies, but human error can occur on both ends.
  • You're allowed one free credit report each year from the three major bureaus. Cycle through them every four months, and you'll have a better chance of catching a problem with your records before it inhibits your life.
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