Most probate courts have a form creditors can complete to submit their claim against an estate in probate. These forms are usually available from the office of the probate court and online from the probate courtís website.
A creditor may also be required to send a copy of the claim to the personal representative or executor of the estate. Creditors should follow all instructions on the claim form and comply with all legal requirements to ensure the claim is valid. A creditor should always consult a probate lawyer before submitting a creditorís claim against an estate.
What Are Duties of Personal Representative Regarding Payment of Creditorís Claims?
The personal representative, also sometimes referred to as the executor or administrator, is responsible to pay or settle all valid claims against the estate to the extent there are sufficient estate assets to pay them. The personal representative has a duty to notify the decedentís creditors that the estate is being probated. Upon receipt of a claim, the personal representative must determine the validity of the claim. The personal representative may be held personally liable to pay claims of creditors that remain unpaid because the personal representative distributed estate assets without paying valid creditor claims. The personal representative typically has to file an affidavit or a similar type of form with the probate court affirming that a notice to creditors has been published.
Can a Creditor Get Paid After Debtor Has Died?
If a person had unpaid financial obligations at the time of death, a creditor seeking payment can pursue a claim against the deceased personís estate. Creditors can file claims against the estate for items such as mortgage payments, credit card debts, utility bills, medical bills, payments owed under a contract, court awards, funeral and burial expenses, probate attorneysí fees, other costs of estate administration, and other debts of the decedentís estate. Any assets owned solely by the decedent may be subject to a creditorís claim.
Creditors have significant legal rights against estates. In fact, if the estate is not submitted for probate in the manner required by law after the decedentís death, a creditor of the estate can apply to admit the estate to probate and be appointed as personal representative or executor of the estate. If a creditor is concerned it will not be paid by the personal representative, a creditor may dispute the probate courtís appointment of a particular personal representative. Creditors can also contest the distribution of estate assets to heirs and beneficiaries in some circumstances.
While creditorís rights vary by state, creditors are generally entitled to be paid before estate assets can be distributed. Certain claims of creditors have a higher priority under the law than other claims. Creditor claims usually must be paid in order of priority if estate assets may be insufficient to cover all claims. If a personal representative refuses to pay a claim, the creditor may file a civil lawsuit to dispute the claim denial.
How Does Probate Affect a Creditorís Right to Collect a Debt?
One of the advantages of having an estate go through probate is it provides a clear process for resolving creditor claims. If an estate is probated, creditors only have a limited period of time, which is set by state law, to file a claim against the estate. If a creditorís claim is not submitted to the personal representative within the time period provided by law, the creditorís claim may be barred permanently, unless the creditorís failure to file a timely claim is due to fraud or concealment by the personal representative.
If the executor, beneficiaries or heirs are concerned the decedentís debts may prevent clear title from being granted to estate property, probate provides a mechanism for dealing with such issues. Probate is a way to clear title to real estate and get other probate assets released to beneficiaries of the deceased personís will or heirs of the estate.
Are Children of Deceased Liable for Estate Debts?
For information about whether a creditor, debt collector or collection agency can hold a child of the deceased debtor responsible for unpaid bills and other financial obligations, refer to our page on parent's debts.
How Are Creditors Notified of the Death of a Debtor?
State laws provide a notice procedure for creditors to be notified of the probate of an estate. A notice to creditors typically must be published in a newspaper of general circulation in the county where the deceased person was domiciled at the time of death. Creditors then have a specified number of months or days after the date of publication to file a claim against the estate.