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Creditors and Bankruptcy/Creditors' rights on Probate property

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Expert: Regan Shinski - 3/16/2010


Question
Hi Regan,

My husband died lately. House under his name, have to open a probate.  There are credit card and medical bills outstandings.  Would creditors put a lien on the property and force to sell the house? Will they go after me?

Thanks

Answer
Hi Purdy:

I'm very sorry for your loss.  It's not easy having the burden of handling probate on top of it.  IF the creditors pursue, they can only pursue against his ESTATE, not you.  This is assuming you are not tied to the accounts as a joint account holder as an example.  Basically, the estate has to add up the liquid assets (cash, life insurance, annuity, 401k, etc# and pay off whatever debts they can with it.  If the estate is short or cannot pay all debts, it is up to the creditor to make the next step.  This can be through a lawsuit or probate hearing.  If they sue #again the estate, not you personally) they could get a lien on any real estate if your state allows it.  This usually does not mean they can force a sale but when the property is sold or transferred, the money would go to the creditor before cash out is received.  In rare cases in some states, a probate court will order the sale of real estate to satisfy debts.  This is usually not the case when the real estate in question is the only property and primary residence of the surviving spouse.

If the estate is upside down, you should advise the creditors of this immediately.

Probate can be complicated because of state and tax laws.  I suggest you reaffirm the issue of your house and any other questions you have with an attorney or free state-sponsored advocacy line.

Another thing to check on is if you live in a community property state.  Laws can be different in those states.

Good luck.

Regan

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Regan Shinski

Expertise

I can answer questions on collections, repossessions, bankruptcy, credit repair, credit counseling, FICO scores, credit planning, and the cause and effect of credit related decisions. I can also answer questions on collection settlements and preparing to sue your creditors for false debts and credit reporting.

Experience

Fifteen years ago I was financially devasted due to severe health issues. I filed bankruptcy, had a foreclosure, car repossession, tax lien, and ruined credit. I immersed myself in credit law. I settled dozens of accounts and had them removed to improve my credit. I personally sued four creditors and collection agencies and won cash settlements for their false reporting on my credit reports. Since then, I have completely recovered and have nearly $100,000 in revolving credit lines and perfect credit. I have owned a credit repair company for the past five years and have an additional three years of specific work in the collections and debt management industry. I am fully versed in the Fair Debt Collection Practices Acts (FDCPA), Fair Credit Reporting Act (FCRA), and have used them successfully in collection settlements and lawsuits for myself and others. I am also familiar with and abide by the Credit Repair Organizations Act (CROA). I have deleted or helped delete literally hundreds and hundreds of derogatory items from consumers' credit reports and helped negotiate many settlements with collection agencies and creditors. I have also advised people on bankruptcy at any stage. In the current credit market, I have successfully advised numerous people on how to obtain credit and how to negotiate for better terms.

Education/Credentials
BA - University of Minnesota

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(private)

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