Creditors in Probate
Estate creditors can be a government entity, such as the Department of Health and Human Services or Medi-Cal, credit card companies, mortgage lenders, auto financiers, banks, hospitals or any number of entities that extended financed money, goods, or services to the decedent.
Notice of Administration of the Estate
It is important to note that other than a mortgage on real property, the debts to a decedent should not accrue any finance charges, fines, penalties or interest after the date of death. Interest can only be “charged” up to the date of the decedent’s death. Once a probate case is opened it is the responsibility of the Personal Representative, or the Personal Representative’s attorney, to notify all of the the known creditors of the estate by serving them with Judicial Council Form DE-157, Notice of Administration of the Estate. This form notifies the creditor that their claim will be considered invalid if they do not properly complete the form, serve it on the Personal Representative and file it with the Court. Fortunately, it is not the responsibility of the Personal Representative to go out searching for estate creditor’s as the notice of the decedent’s death will be published in a local newspaper.
If the creditor believes that the decedent owes them money they have four months from the date the Letters of Administration were issued or sixty days from the date the Notice of Administration of the Estate was mailed to serve the Personal Representative with a Creditor’s Claim (Judicial Council Form DE-172) and file it with the Court.
The Creditor’s Claim must include “facts supporting” their claim. Typically, the creditor will submit an itemized billing statement. In turn, the Personal Representative must review the billing statement to ensure that the claim does indeed constitute a debt of the decedent. Once reviewed the Personal Representative can decide whether to reject or allow the creditor’s claim. If the claim is rejected the Personal Representative must notify the creditor by mail. In turn, the creditor has three months to file a response to the objection.