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How are a creditor’s claims handled in Texas probate?

On Behalf of | May 9, 2022 | Probate

Like other states, Texas has a process through which a creditor may file a claim against the probate estate of someone who has died.

The point of the process is for a creditor to collect a valid debt that otherwise would go unpaid.

It is not just people who are owed a fixed amount who may file a claim. Anyone who can eventually document that the person who dies legally owes money may use the process.

Creditors have this option regardless of whether a person left behind a will or not. On the other hand, it is important to remember that this process only applies to property that passes through probate.

A creditor would have to explore other collection options for property held in trust or property that lawfully passed outside of probate.

A personal representative will have to decide how to respond to the claim

Creditors and personal representatives in the Plano area alike should be aware that the claims process comes with some strict deadlines and important rules. These rules can be tricky to apply, which is why it may be important to consult a probate attorney.

Not observing these rules can have serious consequences. For example, if a personal representative does not decide on time whether to have the estate pay or contest a claim, they could face removal or may have to pay for litigation expenses if the creditor sues to recover its debt.

On the other hand, creditors who are not mindful of deadlines may have their claims disallowed even if they were otherwise accurate and reasonable.

Contested claims may be decided by the probate court

Basically, if a personal representative allows a claim, and no one raises other objections, the court will line the claim up for payment from the estate’s funds provided that there are enough funds to satisfy the debt.

Different rules would apply if an estate does not have the money to pay its debts. If a personal representative denies all or part of a claim, the creditor will have to file the appropriate lawsuit in the correct probate court and do so within 90 days.
Much like any other civil trial, unless the estate and creditor negotiate, the court will hear evidence and make a decision.