A Law Firm Built On Integrity, Perspective And Results

Does your right to collect on a debt end when a debtor dies?

On Behalf of | Jan 2, 2022 | Creditors' Rights

As a creditor who is owed money because you extend financing as part of your business or because you have a judgment against someone, the law protects your interests. Even if there are limitations on how you can collect that debt, you have a right to repayment unless someone discharges the debt in a bankruptcy.

You have the right to engage in collection activity to get the money you’re owed. You can potentially take a debtor to court and ask for a lien against their personal property or a garnishment of their wages.

Your opportunities for convincing a debtor to repay you will end when that person dies. Does that mean that your right to collect on that debt also ends with their death?

Creditors can make claims against someone’s estate

Your right to repayment doesn’t automatically end with the life of the person who owes that debt. Instead, it passes on to any co-signers. If there are no co-signers for the debt, then the obligation passes to the estate of the deceased debtor.

You should be able to bring a claim against their estate for the repayment of your debt. The executor for the estate has an obligation to notify creditors, and the law requires that they repay creditors who file the appropriate claims in probate court before distributing assets to beneficiaries.

As long as there are still assets in the estate, you still have an opportunity to demand repayment. If an executor distributes assets inappropriately, you may be able to hold them personally accountable for their failure to repay you. Learning more about your rights as a creditor can help you demand the repayment that you deserve, even if the situation changes dramatically.