What if There is No Money to Pay Debts in the Estate?
After a person passes away, any outstanding debts will be paid out of the decedent’s estate. A hiccup occurs when sufficient funds do not exist. If this is the case, then certain debts may remain unpaid. However, the personal representative does retain the option of negotiating a payment plan with creditors.
In this blog, the PA probate and estate administration attorney at Audi Law, PLLC, discusses the various options to pay debts when an estate is insolvent and the benefits of having an attorney in your corner.
Assets Can Be Sold to Cover the Costs
Certain liabilities will be prioritized, including attorney fees, court fees, and personal representative fees. Even if the estate is insolvent, the personal representative does have the option to liquidate assets to pay creditors. In the process, the personal representative or estate administrator can contact creditors to develop a payment plan for debts that must be satisfied.
The Debts May Go Unpaid
The assets and debts of a deceased individual will pass to their estate. The personal representative or estate administrator must publish notice of the decedent’s death in two local newspapers where the individual lived for a three-week period. This notifies creditors, heirs, and other interested parties of the estate administration. Under Pennsylvania law, creditors have one year to file any claims against the estate. If the estate has insufficient funds, then these debts may remain unpaid.
The Personal Representative May Be Held Personally Responsible
In certain circumstances, the personal representative may be held personally responsible for any outstanding debts. This may include if you were a joint account holder, co-signer on a loan, or spouse in a community property state. (Pennsylvania is not a community property state, so this does not apply.)
Dedicated Counsel to Handle Your Probate Questions
After a person dies, any outstanding debt will not simply be forgiven. However, there are cases in which the estate may not be held liable for outstanding debts. Creditors have one year in the Commonwealth of Pennsylvania to file a claim against the estate. After this time, these debts may be irretrievable. If the estate is insolvent, debt collectors may receive a portion or no payment for what is owed.
At Audi Law, PLLC, our PA probate and estate administration lawyer, is here to answer any questions or concerns you may have regarding debt obligations. Creditors may contact you directly and mislead you regarding owed payments, so you need to speak with legal guidance to discern what is actually due.
Reach Out to a PA Probate and Estate Administration Attorney
If you are managing debt payments for an insolvent estate, our PA probate and estate administration attorney would like to hear from you. Alternatively, if you are worried about your estate not having sufficient funds to cover liabilities after your death, do not hesitate to contact our legal team. To schedule your consultation or to learn more, contact us online or by phone today.