People who owe significant debts may spend years of their lives repaying what they owe. Creditors have to balance the desire for prompt repayment with the need to allow debtors to fulfill their other financial obligations. In some cases, people who owe money may die early in life leaving a large balance unpaid.
Other times, their debt may be so significant that monthly payment arrangements are insufficient to fulfill their financial obligations. Creditors still have legal protection when people die with balances owed. Probate laws in California allow creditors an opportunity to bring a claim against the estate of the person who died.
The property that belonged to the deceased debtor becomes their estate, and the estate becomes responsible for their unfulfilled financial obligations. Timely action is crucial in such cases, as creditors only have a brief window of opportunity to file necessary paperwork with the California probate courts.
Receipt of notice affects the claim timeline
There are typically two ways that creditors learn about the death of a debtor. In some cases, they receive formal written notice from the personal representative of the estate. Personal representatives typically review financial records and incoming mail to identify parties who may have an interest in the estate because of the deceased individual debts.
They may also publish notice in the local newspapers alerting unknown creditors about the upcoming probate proceedings. Whether a creditor receives direct notice or not determines how long the creditor has to take legal action.
There is only a limited opportunity to take legal action. Creditors usually have to file claims with the probate courts within 60 days of the personal representative sending direct notice of estate administration. In cases where the creditor does not receive direct notice, the creditor may have up to four months from the date they accepted their role as representative.
Particularly in scenarios involving older debtors and individuals with medical challenges, prompt communication after missed payments could help ensure that a personal representative is aware of the creditor.
In theory, creditors should receive payment from the estate before the personal representative distributes any property to beneficiaries. Yet, reaching out for support is often necessary for creditors who need to pursue repayment through the probate courts after a person who owed them money has died.