Dealing with Creditors
Per state probate laws, an estate generally must pay off its creditors before it can distribute assets and property to heirs or beneficiaries.
However, the estate can bypass creditor claims with proper planning. Filing key documents with the probate court can also stop such claims.
Creditors know about these tactics.
Some creditors respect the process. Others, however, get angry and take aggressive action to intimidate family members of the deceased into paying claims from their personal bank accounts or from funds that don’t belong to the estate.
These creditors exploit vulnerable and grieving family members, who pay when they have no legal obligation to do so.
Can Creditors Go After Beneficiaries? Do You Need to Pay Creditors or Not?
Once the probate court appoints an executor or administrator to manage the estate, the estate enters a formal process to identify and address outstanding debts and creditor claims.
State laws generally establish procedures and deadlines for creditors to present claims against the estate.
These rules give the executor or administrator time to identify estate assets and debts, determine which claims are valid, and understand whether the estate has sufficient resources to meet its obligations.
Secured debts, such as mortgages or vehicle loans, may be treated differently because the creditor has a security interest in specific property. Depending on the circumstances and applicable state law, failure to keep required payments current may put that property at risk of foreclosure or repossession.
The probate claims process serves two important purposes.
First, it gives the personal representative time to develop a clear picture of the estate’s financial situation.
Second, it provides an organized process for paying debts, expenses, taxes, and other obligations before distributing the remaining property to beneficiaries or heirs.
Executors and administrators must therefore avoid distributing estate assets before properly addressing outstanding obligations. Distributing property too early or failing to follow applicable creditor and payment-priority rules can potentially expose the executor or administrator to liability and may require improperly distributed assets to be recovered.
Get professional help
Our office is very familiar with the tactics and strategies that creditors use to pressure family members and collect more than their fair share of the estate.
We work to maximize the amount of the estate that goes to beneficiaries and heirs and minimize payments to creditors because we believe family assets should stay within the family.
If you want to maximize the portion of property that stays in the estate, stop creditors from harassing you, or keep a lender from foreclosing on estate property, contact our experienced probate team to understand your rights, stop unfair practices, and protect the estate. Call us now at (770) 920 6030 to schedule a confidential, one-on-one consultation.
