Estate Debt, Claims Against an Estate
Almost always, when a person dies, there is some debt in varying form for next-of-kin, personal representatives, executors, or administrators must assess. There are many factors that should be considered when deciding to pay estate debt. An experienced probate and estate attorney can help you sift through the debt of utility bills, car payments, mortgages, home equity lines of credit, credit card bills, unpaid rental contracts, and other expenses that are so common when a person dies. We can help you determine what must be paid, and what debts (from the smallest cell phone bill to the largest mortgage) require action and payment.
After an estate is open, creditors of the estate have a six-month period from the date the estate is open or five months from the date of the first publication of notice, whichever is later, to file a claim on the estate with the probate court. Creditors must receive actual notice under Ala. Code §43-2-61, which requires first-class mail addressed to their last known address or by another means that assures notice is given and by publication. The creditors then may file claims in accordance with Ala. Code §43-2-350. The claim or statement of the debt must be verified by affidavit. If the claim is not presented according to statutory requirements, the claim will be forever barred and payment of the claim is prohibited. Note, if the debt must be paid, there is a certain order of payment priority for claims. For example, a mortgage (secured debt) would take priority over credit card debt (unsecured debt). The order of payment is especially important when an estate is insolvent. In insolvent estates, under Ala. Code §43-2-751, creditors may sue beneficiaries who received money from estates if the creditor had a proper claim that was not paid. So, it is important to assess estate debt and payment of estate debt correctly. An important practice note for insolvent estates (or estates that are borderline insolvent) is that homestead, family allowance, and personal property exemptions may be available to ward off creditors if the exemptions are properly filed by a next-of-kin, personal representative, executor, or administrator.
An attorney can object to creditor claims on behalf of next-of-kin, personal representatives, executors, or administrators. Written notice of the objection must be provided to the creditor. Under Ala. Code §43-2-354, a judge sets a hearing on the objections to the claims, and the creditors must appear and show proof of their claim.
Our firm, Lindsey Eastwood Law, successfully objects to creditor claims, and we can negotiate the amount paid to the creditor to lower or completely clear the creditor’s claim if they do not appear at the hearing. We have saved our clients thousands of dollars through this process.
After an estate is open, creditors of the estate have a six-month period from the date the estate is open or five months from the date of the first publication of notice, whichever is later, to file a claim on the estate with the probate court. Creditors must receive actual notice under Ala. Code §43-2-61, which requires first-class mail addressed to their last known address or by another means that assures notice is given and by publication. The creditors then may file claims in accordance with Ala. Code §43-2-350. The claim or statement of the debt must be verified by affidavit. If the claim is not presented according to statutory requirements, the claim will be forever barred and payment of the claim is prohibited. Note, if the debt must be paid, there is a certain order of payment priority for claims. For example, a mortgage (secured debt) would take priority over credit card debt (unsecured debt). The order of payment is especially important when an estate is insolvent. In insolvent estates, under Ala. Code §43-2-751, creditors may sue beneficiaries who received money from estates if the creditor had a proper claim that was not paid. So, it is important to assess estate debt and payment of estate debt correctly. An important practice note for insolvent estates (or estates that are borderline insolvent) is that homestead, family allowance, and personal property exemptions may be available to ward off creditors if the exemptions are properly filed by a next-of-kin, personal representative, executor, or administrator.
An attorney can object to creditor claims on behalf of next-of-kin, personal representatives, executors, or administrators. Written notice of the objection must be provided to the creditor. Under Ala. Code §43-2-354, a judge sets a hearing on the objections to the claims, and the creditors must appear and show proof of their claim.
Our firm, Lindsey Eastwood Law, successfully objects to creditor claims, and we can negotiate the amount paid to the creditor to lower or completely clear the creditor’s claim if they do not appear at the hearing. We have saved our clients thousands of dollars through this process.