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How to handle creditor claims on a California estate

| Oct 19, 2021 | Creditor Claims |

There’s a common misconception that a person’s death eliminates their need to repay their debts. This isn’t the case, though. A person’s death does not do away with creditor claims for business or personal debts. 

Creditors must act quickly to avoid losing out on the opportunity to pursue their claim. Every state has its laws on probate procedures, including how creditors are handled. Therefore, it is necessary to proceed carefully to increase the likelihood of a desirable outcome.

Creditor claims against probate estates

Probate administrators and executors are required to notify known creditors that they can make their claims. A known creditor has demanded payment from the decedent’s estate. The estate’s personal representative is supposed to give notice to these creditors who have made their claims known. 

Under California law, such notice has to be personally mailed or delivered for it to be valid. In addition, the notice must be issued within 30 days after the personal representative becomes aware of the creditor or four months of the issuance of date letters to a personal representative with general powers.

Once a creditor has filed a claim, the executor or estate administrator will either settle the debt or dispute all or part of it. If the executor disputes the claim, they have to give notice to the creditor, who may file a suit within 90 days of the rejection of their claim.

Time is of the essence

It is crucial to protect your rights by observing these deadlines set by law. Although you can file a late creditors claim with valid reasons, a timely one will prioritize your interests. For instance, a claim cannot be made after the probate court makes an order for the final distribution of the estate. Also, claims made one year after the decedent’s death may not be enforceable.