Succession can sometimes present problems, both foreseen and unexpected. While the ultimate aim of probate is the disbursement of inheritances, creditors are also entitled to make claims against an estate. Under certain circumstances, creditors can file a lawsuit against a deceased person’s estate to recover unpaid debts.
Creditor Claims in LA Probate Proceedings
The executor of an estate is responsible for disbursing inheritances and ensuring that an estate’s creditors are paid. The Louisiana Code of Civil Procedure details how prospective creditors can recover any outstanding debts.
How Creditors Recover LA Debt
- If the creditor wants to file a claim against the estate, they must submit notice to the estate representative.
- The estate representative has 30 days to either acknowledge or reject the claim.
If the executor acknowledges the claim, it is presumed valid. Unless the estate representative objects to the claim, the representative may ask the court to authorize a payment of the debt. The creditor could then receive compensation from the estate.
Estate Representatives Can Reject LA Creditor Claims
Estate representatives are legally obliged to notify potential creditors that they have initiated probate proceedings. However, an executor need not accept or respond to a claim.
If the estate representative does not respond to a claim, the court will presume that it has been rejected.
How Creditors Make Legal Claims on Unpaid Debts
If the estate representative rejects or does not respond to a creditor claim, the creditor could file a formal and written proof of claim to the executor.
What’s Included in a Written Proof of Claim
- The name and address of the deceased creditor
- The amount of the claim
- A description of the claim
- A description of any security associated with the claim
- Any relevant evidence of the debt
Creditors and Estate Lawsuits
Estate representatives are fiduciaries, which means they must act in the best interests of the estate. If a representative does not believe that a creditor claim has merit, they may reject it. However, creditors are considered “interested parties” in probate proceedings. This means, they may contest an estate’s dissolution and intended disbursement of assets.
Thus, creditors often respond to claim rejection through alternate legal strategies. These alternate remedies could include a lawsuit or lawsuits.
Reasons a Creditor May File a Lawsuit
- To contest the validity of a will
- To ask the court to recognize that the deceased person’s debt is still valid
- For the continuation of litigation initiated prior to the decedent’s death
- For the recovery of estate property held as secured debt
Creditor Claims Aren’t Always Made in Good Faith
An estate representative could be appointed by the court. However, if the deceased person had a will, they likely designated an executor. Often, the estate representative is a close friend or family member of the decedent and may not have any special legal training. Creditors often try to take advantage of estate representatives in court.
How Creditors Take Advantage of LA Representatives
- Trying to recover expired debt
- Seeking a judgment lien against a protected property
- Pressuring heirs and family members to pay back the decedent’s debt
The Dangers of Creditor Claims
A significant creditor claim could pose a serious threat to an estate. Even if the personal representative eventually prevails in court, protracted litigation can be time-consuming and emotionally draining. If the creditor is unwilling to negotiate in good faith, the estate representative could be compelled to use the estate’s assets to defend against the claim.
By the end of the lawsuit, the deceased person’s loved ones, heirs, and beneficiaries could be left with little to nothing.
Are You Facing an LA Creditor Claim?
You do not have to face a creditor claim alone. Scott Vicknair Law can help protect your loved one’s legacy by ensuring that an estate’s most valuable assets remain safe from potential threats. We can assess the validity of a creditor’s demand and stand up to them in court if their claim cannot stand up to Louisiana law.
If you have any questions about how to handle a creditor claim in a Louisiana succession claim, please call Scott Vicknair Law at 504-264-1057 to get started on your case today.