My wife is the executor of her mom's estate who passed away last year. Her mom owed credit card debt and has received medical bills since then. We live in Texas and her will was probated in February 2012. The attorney who did the will posted the notice of her death for creditors (I guess in the paper or something). We were told that in Texas the creditors have 4 years from the will probate date to file a claim saying her mom owed them money. I have a few questions that I can't find answers to. What makes a creditors claim official? Does it have to be addressed to 'The Estate of...' and acknowledge her passing? I ask because we have recieved a few letters from creditors (credit card and medical) addressed to her mom, not the estate, saying she owed X amount and they are willing to settle for Y amount. They read as if they think she alive. Would a letter like that be the official claim? Can credit cards charge interest and late fees since she passed if they were not notified of her death? If we notify them now and tell them when she passed away does the collection agency have to subtract the interest and late fees that built up over that last 10 months or can they use the balance with the interest and late fees? For example - One card had a balance of $8409 the month after she passed. We received a letter from a creditor last month saying her balance was $9712(had interest and late fees) but they would settle for $3885. Don't know if we should tell them to use the balance as of death to see if they will settle for less than the $3885 or just settle for the $3885. Since in Texas the creditors have 4 years to file a claim, then does the estate also have 4 years to settle any debt? This is all new to use and very overwhelming so we are looking for any input.
I'm not a lawyer, so take my thoughts with a grain of salt, but I've gone through this before with a family member. My understanding is that the creditors will eventually have to make an official claim against the estate, and it needs to be sent to the executor or administrator of the estate in writing. Frankly, they may not have found out yet that the debtor is deceased, which is why they're still sending letters as if she were alive. According to the recent CARD Act, executors of an estate can contact the credit card companies and request a statement showing the credit card balance. The issuer then has 30 days I believe to provide that information and they can't charge any interest or fees as long as the estate then pays off the debt within 30 days of receiving the balance info. However, if they haven't been notified at all, they may still be able to charge interest and fees on top of the balance. My experience was that the credit issuers were fairly understanding and willing to waive any fees, etc. to work with the estate and family members. I was dealing with smaller balances and the estate had enough funds to pay quickly, so that made our situation easier. You might want to think about getting an estate attorney to help consult with you on some of these issues. Yes, it'll cost a bit of money, but they deal with this stuff all the time and can provide a wealth of information.
I spoke with the attorney who did her mom's will and she did say that in Texas, creditors have 4 years from the date of the Wills probate to file an offical claim that her mom owed money. An offical claim would be addressed to 'The Estate of...' and sent to the attorney's office most likely. Somewhere in the letter it would mention something about ' this is a notice of claim' or something like that. Anyhting you get addressed to the person and not 'the Estate of' are probably still under the impression that the person is still livinig and just not paying their bills. According to the attorney, those letters can be ignored since they are not official claims, but if you want to settle you can go ahead and contact them. I also found out that that the estate has the same 4 years to settle with any officail claims. So the one we have so far in our case, we have to settle at some point but we do have the 4 years to do so if we like. If the credit card has not turned over the debt to a collector, you can contact them and they have to deduct the interest and late fees that were added after the date of death. If the debt has been bought by a collector it is a little fuzzy. They don't care if the credit card place charged the interest and late fees after death since they bought the debt. The attorney said when you try and settle with the collector you can tell them X amount was charged that should not have been and try to have them take that extra off the settlement. The attorney also said any medical bills we have for her that have not been turned over to creditiors we should mail a copy of her death certificate along with a letter stating she passed away on X date. She said some places will just write off the bill at that point. Never thought this process would be so hard to figure out. One thing I have learned is no one is going to do their job as you would expect, so research everything to make sure people follow through on their job. I just wanted to share what I found out so far. If I discover any more info I will post it.
Yes, it can be a complicated process...I know exactly what you mean. Thanks for sharing what you've learned so far though, and good luck working through things. Keep us updated on how it goes.
