California Debt Collection Laws for Deceased Persons

By Tom Streissguth

When a resident of California dies, an estate remains -- the property legally belonging to that individual. The estate must typically go through probate before a personal representative can distribute assets to heirs and beneficiaries. The representative must also handle the decedent's debts and deal with creditors who have claims against the estate.

When a resident of California dies, an estate remains -- the property legally belonging to that individual. The estate must typically go through probate before a personal representative can distribute assets to heirs and beneficiaries. The representative must also handle the decedent's debts and deal with creditors who have claims against the estate.

Creditor Claims

If a creditor seeks to collect an outstanding balance owed by you after your death, he must file a claim against your estate. If the debt is legitimate, the personal representative is responsible for paying it out of the estate before your assets can be distributed. In California, creditors have 60 days to file claims with the court beginning with the date the representative notifies them that the estate is in probate. Alternatively, they have four months from the date the probate court authorizes the representative to act on behalf of the estate. Creditors can use whichever option gives them the most time.

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Community Property

Federal law bars collectors from demanding payment from relatives or anyone else who does not have legal responsibility for the debts of a decedent. For example, if you held an account jointly with someone else, that individual is liable for paying it. Additionally, California is a community property state, so your spouse can be held liable for debts contracted during your marriage even if she did not personally contract for them. If the estate consists solely of community property, probate is not required and creditors can take action to collect marital debts directly from your surviving spouse.

Priority Claims

State law in California determines the order in which your creditors and debts are paid after your death. The federal government has first priority, such as if you owe back taxes to the IRS or past-due, federally guaranteed student loans. Child support arrearages also take priority. Claims secured by property take precedence over unsecured claims such as credit card debt. If the estate does not have sufficient assets to repay creditors, your estate is insolvent and some creditors may not be paid. This means your beneficiaries won't inherit anything because all creditors must be paid first before your representative can make bequests.

Refused Claims

Your personal representative has 30 days to act on creditor claims against your estate. The personal representative may require receipts or account statements as a proof of the claim. If the claim goes unpaid, the creditor has three months to file a lawsuit -- California law allows these actions up to one year following the date of your death. If the court finds in the creditor's favor and issues a judgment, the creditor may start collection actions against your estate or its beneficiaries.

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Probate Creditors' Rights Under Texas Law

References

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How to Prove That an Estate Is Solvent in Georgia

Georgia law defines a solvent estate as one that has the funds to cover all exemptions and pay all debts according to the hierarchy of debt payment provided by statute. In Georgia, a portion of an estate's value is protected from creditor claims. Debts of the estate are then paid in order according to Georgia statute. Unsecured creditors are paid last if the estate has the money, or assets left to liquidate, to pay them. Georgia estates are assumed solvent unless and until the estate runs out of money or assets available for liquidation during the debt payment portion of the probate process.

How to Write a Letter Requesting the Payment of a Deceased's Debt

If someone died owing you money, you may request payment by writing a letter to the personal representative of the deceased's estate. Generally, each state has a statute listing all the information such a letter must include in order for it to constitute a valid creditor's claim. You must send the creditor claim letter to the personal representative within a certain time frame. If the letter includes all the information required by statute and is mailed before the deadline, you take your place in the line with the rest of the estate's creditors to be paid from the estate's available funds.

Estate Administrator Duties

When a person dies, his estate will likely go through the probate process, whether or not he left a will. During probate, the estate will be collected, debts paid and remaining assets distributed to beneficiaries. The person assigned the duty of managing the estate through this process is called an administrator or executor. Since state statutes govern estate administration, the administrator must follow state law regarding procedures and time frames.

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