How to Collect a Debt from a Deceased Person
Updated: Oct 26
When someone dies, it can be a difficult time to discuss money. When someone owes you money, and that person has passed away, how do you collect?
· File a creditor’s claim against the estate
· If the estate’s personal representative (PR) approves your claim, he must pay you
· If the PR rejects your claim, you may sue
I’ll explain these steps in more detail:
The Oklahoma Rules of Probate Procedure provide a way to collect a debt from a deceased person. First, someone “interested in the estate” must file a probate proceeding. To see what a probate proceeding is like, read my post, “What Happens in Probate Court in Oklahoma?”
In every probate proceeding, the judge must appoint a personal representative (PR). The PR must send notice to all creditors of the estate. If the PR knows the name and address of a creditor, the PR must mail notice to the creditor. The PR must mail the notice less than ten days after he filed the notice in court. If the PR does not know the name and address of a creditor, the PR must publish notice in a newspaper in the county where the probate proceeding takes place. Even if the PR is unaware of any creditors, the PR must still publish notice to creditors in the newspaper. The PR must publish notice less than ten days after he filed the notice in court, and he must publish the notice once a week for two consecutive weeks.
If the PR sent you notice by mail
If you have received notice in the mail, then if you have any claims against the estate, you must present these claims to the creditor within two months after the PR filed the notice in court. Your claim must be in writing and must state the nature and source of the claim. If your claim is secured by any interest (such as a mortgage, lien, or collateral) your claim must describe the security interest.
If the PR did not send you notice by mail
If the PR published notice in the newspaper, you must present your claim within two months after the PR filed the notice to creditors in court. If you were outside of Oklahoma at the time the notice was published, and you did not receive notice in the mail, you may present the claim at any time before the PR files his motion for final accounting.
If the PR did not send you notice of the claim, and if you can prove that the PR knew you were a creditor of the estate and knew your address, then you can present your claim at any time. If the probate proceeding has already concluded, you may file a motion to re-open the probate proceeding. The U.S. Supreme Court has held that, if the PR knows the name and address of a creditor, it violates the creditor’s constitutional rights if the PR does not mail notice to the creditor. The Oklahoma Supreme Court has further held that, if a court has entered a final probate decree, and the PR did not give constitutionally sufficient notice to all persons, then any creditor who did not receive proper notice may re-open the probate at any time.
If you hold a mortgage on the real property of the estate, you may file a foreclosure suit within any time that the Oklahoma Rules of Civil Procedure allow. (These rules are different from the Oklahoma Rules of Probate Procedure.) However, if the estate still owes a balance of the debt after the foreclosure has concluded, you may not collect this debt unless you presented your claim within the time frame required by the Oklahoma Rules of Probate Procedure.
What happens after you present your claim?
After you present your claim, the PR has thirty days to accept or reject the claim. If the PR does nothing for thirty days, the claim is deemed rejected. After the PR chooses to accept or reject the claim, then the PR must submit his acceptance or rejection to the judge. The judge then has thirty days to approve or reject the claim. If the judge does nothing for thirty days, the claim is deemed rejected.
If the PR or the judge accept your claim
If the PR or the judge accept your claim, then the PR must pay you out of the decedent’s estate. The judge may not close the probate case until the judge is satisfied that the PR has properly paid you.
If PR or the judge reject your claim
If PR or the judge reject your claim, you may then sue the estate. You must sue the estate within
· 45 days after the rejection, if the claim is then due, or
· If the claim is not then due, then you must sue within two months after the claim becomes due.
If you do not sue within the proper time frame, your claim is forever barred.
If you sue, you may ask the judge to set a date for a trial. At the trial, you must present evidence as to why you believe the decedent owed you money. After the judge hears evidence, the judge will decide whether the estate actually owes you, and if so, how much. If the judge orders the estate to pay, the estate must pay.
If you lose at trial, you may appeal to the Oklahoma Supreme Court. If you win at trial, the estate may appeal to the Oklahoma Supreme Court.
If you and the PR cannot agree on how to settle the debts of the estate, it may be preferable to go to mediation rather than to trial. Mediation is a process where you and the other party meet before a third-party neutral called a mediator. The mediator is not like a judge in that he cannot order you or the other party to do anything. Mediation is often cheaper, less adversarial, and less time-consuming that going to trial. To find out more about mediation, read my blog post here.
Need further advice on collecting a debt of a deceased person? Contact the Persaud Law Office.
The Persaud Law Office has handled many probate cases, and has negotiated the debts of many estates. If you’re trying to collect a debt from an estate, we can help you. We can also help you if you are the representative of an estate, and a creditor has filed a claim against you. Contact us today.