Expert: Michael Brotherton - 5/27/2008

Question
QUESTION: My father died unexpectedly at 84 y/o last November 2007.  Credit card companies are calling me, his eldest daughter to settle or pay his credit cards.  He has a small home that he purchased last August 2007 that is worth 100k with a 65k mortgage.  It is now close to 3 mos. behind although I was able to make a payment on it 2 weeks ago. I found a "rent to buy tenant" on a lease option hoping to catch  the house up on payments and should be able to do so using the option fee money.  Dad owed about 20k on credit cards. What is the best way to handle these creditors who keep calling and want me to pay up front since I am a stay at home mom and my sister is a missionary?

Thank you for your help.

ANSWER: First, you are technically not obligated to pay his credit cards. However, they can file a claim against the estate in probate and if there are any assets they may have to liquidate the assets to pay some of the bills. This is where negotiation can come in handy. If there are limited assets you may be able to settle for pennies on the dollar. If you haven't already opened probate you should to get this out of the way and see if any of the creditors file a claim. If not, don't worry about them.

As for the house. If there was a will or the estate is being probated whoever is to take over the home may ask the lender to allow you to assume the loan and ask for a modification to help catch up. This is a lengthy process and can get complicated if you have never done anything like this before. I may be able to help if you need someone to assist you in managing the process and assisting in negotiation.

Feel free to call me at 877 270 8204.

I hope this helps.

---------- FOLLOW-UP ----------

QUESTION: I just had a lease to purchase renter get in the house last week.  Is this going to be a problem in probate.  What is the advantage to doing probate now or can I wait a year to do it?  Thanks

Answer
If the house is in your father's name you cannot legally do a lease purchase since your name is not on the deed. You must have legal title to the property. It is best to do probate ASAP since the courts will have to approve an transaction like this or otherwise may require certain assets be liquidated. You may be able to manage the property for the rental income but even this may have to be accounted for in probate.

My advice is to seek counsel with an experienced and trustworthy probate attorney.