Creditor Claims Against the Estate: Navigating Legal Responsibilities After Death


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Dealing With Creditor Claims Against an Estate After Death

Understand how to manage creditor claims against an estate with this comprehensive guide from Perigon Legal Services. Learn your rights and obligations in Georgia.

Author: Stan Faulkner, Founder, Perigon Legal Services, LLC

Mr. Faulkner is an experienced counselor and litigator with 15 years of experience, having held bar licenses in four states (Mo, Il, Ct and Ga). Stan Faulkner uses this experience and focuses his skills in the pursuit of assisting individuals in probate (trust and estate) matters, guardianships and conservatorships, estate planning, business disputes and contract disputes. Published on May 06, 2024.

When administering the estate of a deceased individual, it is essential to address any outstanding debts that the decedent’s death may have left behind. As experienced estate planning attorneys, we at Perigon Legal Services understand the importance of managing creditor claims against an estate. 

These claims can come in various forms, from informal billing to formal probate court filings. Handling them is a crucial step in the probate process to ensure that the decedent’s assets are distributed according to their wishes and the law. Creditors typically have a limited timeframe to make claims against the estate, and failing to address these claims properly can lead to complications, reducing the value that beneficiaries receive.

Our team diligently assists executors and personal representatives in navigating these claims, offering detailed and focused guidance to ensure that every aspect of the decedent’s estate and administration is thoroughly managed. With our understanding of estate planning and knowledge of probate law, we are committed to helping our clients through each step of the probate process with care and professionalism.

Understanding Creditor Claims Against the Estate

When handling an estate, it’s essential to address creditor claims. These are demands for payment from the estate’s assets for debts incurred by the deceased person. In Georgia, the legal process is clear: creditors have the right to file claims against an estate to collect what they are owed. 

According to the Georgia Code, these claims follow established procedures and timelines that must be strictly adhered to. Any claim against the estate must be presented within the designated time frame, or the right to recover may be forfeited. 

To avoid complications, creditor’s claims should be addressed as follows:

  1. Notification: Inform creditors promptly of their right to file a claim.
  2. Review: Analyze each claim diligently to ascertain its validity.
  3. Timeliness: Respond to claims within the legal time limits.
  4. Payment: Settle legitimate claims from the estate’s assets.

This approach protects the estate from potential legal claims arising from disputes and financial setbacks.

    Types of Creditor Claims

    Creditors can file two main types of claims against an estate: secured and unsecured. Secured claims are those backed by collateral such as property or other assets; if the debt is not paid, the creditor then has a right to take back the property. In contrast, unsecured claims do not have this backing, making them riskier for creditors.

    Common Creditor Claims

    • Medical bills: Often sizable, these arise from healthcare services provided to the decedent.
    • Credit card debt: Unsecured claims stemming from the decedent’s credit card spending.
    • Loans: These can be secured, like a mortgage or car loan, or unsecured, such as a personal loan.

    Understanding the nuances of each is crucial since they influence the order of payment during the estate settlement process. We meticulously navigate through these claims, ensuring our clients’ estates are managed with utmost precision. 

    The Process for Handling Creditor Claims in Georgia

    Under Georgia law, the process follows a well-defined path to ensure fairness and compliance.

    Notification of Creditors

    As your personal representative, we send out notifications to all known creditors, informing them of their right to file a claim. We rigorously adhere to the legal deadlines set forth by the state, providing creditors with a window to submit their claims, typically within three months from the date of notice.

    Filing of Claims

    Creditors must formalize their claims by filing them within the prescribed period. At Perigon Legal Services, we review each submitted claim thoroughly against the estate’s inventory. 

    Executor’s Responsibilities and Rights

    As executors and administrators of estate in Georgia, our responsibility extends to assessing the validity of each creditor’s claim and prioritizing them so the estate can have sufficient funds to be distributed. We take this role seriously, knowing the importance of each decision we make on the estate’s behalf. 

    When necessary, we take decisive steps to dispute invalid claims, always striving to preserve the estate’s assets for rightful beneficiaries.

    Common Challenges and How to Overcome Them

    Disputes over claim validity do occur, and as your legal caretaker, we employ strategic negotiation and settlement techniques to resolve these matters effectively. Our skillful approach aims to mitigate disputes quickly, thereby safeguarding the estate’s integrity.

    Throughout the creditor claim process in Georgia, we ensure every step is taken with precision and in the best interest of our clients.

    Impact of Creditor Claims on Estate Distribution

    When an individual passes away, their estate typically goes through a process known as probate, where debts are settled, and the remaining assets are distributed to heirs and beneficiaries. As part of this legal procedure, creditors have the right to assert their claims against the deceased person’s estate.

    Understanding Creditor Prioritization

    The role of the executor or administrator is paramount; they sift through the claims and prioritize them according to the law. It’s critical to know that not all debts are equal—some claims hold superiority over others. This prioritization influences how much, if anything, is left for the heirs after all debts are settled.

    • Secured debts: Typically attached to an asset and are generally paid first.
    • Administrative expenses: These are costs associated with settling the estate and come next in line.
    • Unsecured debts: These include debts such as credit card bills, which are addressed after secured debts and administrative expenses.

    Our Approach at Perigon Legal Services

    We work closely with our clients to navigate the challenges of creditor claims. Our approach is tailored to ensure every estate we manage complies with the law, protecting the interests of our clients’ estates and beneficiaries. 

    We aid executors in assessing and satisfying valid claims, mitigating the potential for disputes, which can further erode estate value. Examples of ways we can offer our assistance include:

    • Evaluating the legitimacy of creditor claims.
    • Settling an estate efficiently to prevent unnecessary erosion due to prolonged processes.
    • Strategically advising on potential litigation or negotiations with creditors.

    Our dedication to detail means we scrutinize each creditor claim, ensuring that only legitimate estate debts are paid. This process, when handled with our professional care, minimizes the estate’s liabilities and maximizes what can be passed on to heirs. 

    Schedule a Free Consultation With Our Law Firm 

    Diligently handling creditor claims is vital in preventing complications that may arise with the decedent’s estate. As advocates for our clients at Perigon Legal Services, we underscore the importance of managing these claims judiciously. Managing creditor claims is just one aspect of our comprehensive services, and we stand ready to employ our skills to safeguard the interests of our clients and their loved ones.

    We encourage family members and those in need of compassionate and professional assistance to contact us for professional guidance and support. Our approach encompasses both excellent business acumen and personal skills, allowing us to cater to your unique needs with sensitivity and precision. 

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