Handling, and Objecting to, Creditor Claims in Probate

If there is a probate case after someone passes away, the estate will have to give notice of the passing and of the administration of the estate, in the way that Florida probate law requires. Part of the reason for doing this is to alert creditors, so that they can make claims on the estate.

Not every creditor gets paid—there is an order of priority for creditors, because in many cases, an estate won’t have the assets to pay off all of the deceased’s creditors. But often, a creditor shows up with a claim that the estate (through the executor or personal representative) does not believe is valid.

Can You Challenge a Creditor’s Claim?

Many executors or representatives believe that they must simply pay any creditor who shows up in probate court and claims that they have a valid debt that must be paid from the assets of the estate. This is not true, and in fact, the representative has a duty to challenge those claims made by creditors against the estate that may not be properly supported. .

If the estate does not believe the claim is valid, the estate has a right to challenge the debt the same way that the deceased would have been able to have the claim been made against the deceased while he or she was alive.

Objections and Claims

The first step is the estate objecting to a creditor claim that may be filed in the probate court. After that, the creditor has 30 days to file a separate lawsuit to enforce the creditor’s claims. If no such claim is filed, the debts are considered invalid, and no claim can be made on the assets of the estate.

Basis for Challenging Creditor Claims

If an independent lawsuit is filed, it must be resolved before the state is settled. This can delay disbursements and distributions to beneficiaries.

Creditor claims can be challenged in a number of different ways. Of course, some claims may just be outright incorrect—a creditor of “Jane A. Smith,” may file a claim against the estate of “Jane E. Smith,” erroneously. Or, a creditor may file a claim, when the legal time limit to collect the debt has expired. Creditors often mix up familiar sounding names, or dates of birth, or similar social security numbers.

Creditors often make claims, but have no proof of them. For example, they may not have the original contract evidencing the debt, or they may be enforcing the debt on behalf of another entity, and thus, may not have standing. Interest on debts may be illegal, or in violation of the contract between the creditor and the deceased. The creditor may not have properly credited payments made by the deceased previously.

Benefits to Settlement

The estate wants to settle the creditor’s lawsuit so that it can close, and disburse assets to beneficiaries. The creditor may want to settle, knowing there may not be a lot of assets in the estate to pay the claim in the first place. Often, mediation or negotiation can settle creditor claims.

We can help you handle creditors in your probate case.  Call the West Palm Beach probate lawyers at The Law Offices of Larry E. Bray today for help with your case.

Source:

leg.state.fl.us/Statutes/index.cfm/ch0517/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0733/Sections/0733.705.html