What Are A Creditor’s Claims Against A Decedent’s Estate?

In most cases, the rights of creditors against a debtor can be enforced through traditional collection suits, foreclosures, and other similar actions. However, when the debtor is deceased, the procedure for collecting on debts owed is much different than traditional avenues of enforcement. The following article provides helpful guidance by shedding light on what constitutes a creditor’s claim, how a creditor’s claim is filed and when to file it.

What is a Creditor’s Claim?

A creditor’s claim can arise in two contexts. The first occurs when the creditor attempts to collect a debt for which the decedent is liable under contract, or that the decedent has incurred as a result of a tort, unpaid taxes or unpaid funeral expenses. In these cases, the creditor is essentially making a demand for the payment of liabilities the decedent has incurred. Common examples of a creditor’s claim in this context include a bank’s claim for the payment of amounts due by the decedent under a mortgage or a claim by the IRS to collect the decedent’s unpaid taxes. Examples of liability arising out of tort include claims for personal injury, wrongful death and property damage against the decedent. These claims may all be collected against the decedent debtor’s estate.

The second instance in which a creditor’s claim may arise is when the decedent promises to make a distribution or payment from his or her estate upon the decedent’s death and that distribution or payment fails to occur. The person to whom the promise was made has a creditor’s claim against the decedent’s estate for the amount promised.

How to File a Creditor’s Claim

Generally, claims falling under the first category (claims arising out of contract, tort, taxes or funeral expenses) must be filed with the court after the estate enters probate. Filing a claim requires the use of a Judicial Council creditor’s claim form, which is available at the courthouse or on the Judicial Council website.

A creditor must then serve a copy of the claim upon the person appointed as the personal representative of the decedent’s estate. Service must be made within 30 days after the claim is filed or 4 months from the date the Letters Testamentary or Letters of Administration are issued, whichever is later. Failure to serve the personal representative invalidates the claim.

When to File a Creditor’s Claim

If probate has been opened on the decedent’s estate, a creditor has until either four months after the letters are issued or 60 days after the date the personal representative mails or personally delivers notice of administration to the creditor, (whichever is later), to file a claim with the court. Claims filed one year or more after decedent’s death are barred and will not be recoverable.

Being knowledgeable about creditor claims and the process used to file and enforce them will increase a creditor’s chances of successfully collecting his debt. The information in this article, together with the advice of counsel, should be considered before attempting to collect against a decedent’s estate.