A Different Solution for Business Owners Who Are Owed Money by Someone Who Dies

When a person dies, most often a family will begin the estate administration process at the local court either on their own or with the help of an attorney. One of the first required steps is to publish a “Notice to Creditors” in the newspaper so that unknown creditors have an opportunity to present their claims and also to give specific personal notice to any and all known creditors. A “known creditor” is one that the personal representative knows about or should have known about. For example, if the deceased person was in a nursing home or received health care services before he or she died, that nursing home or health care provider is a “known creditor” and should receive specific notice. If a contractor put a new deck on a house and the person dies before making payment, that contractor is a “known creditor.” If the creditor does not receive notice, there are steps that can be taken to try to recover the debt owed.

But what happens when no estate administration is opened? Often times, if there are minimal assets or only real property is owned, the family does not administer the estate. Sometimes this is because the family does not know better and other times it is a deliberate attempt to avoid creditors. When creditors call they can say, “no estate is being administered” and typically the creditors go away, writing the amount owed off as bad debt.  However, there is another option and this is one that we often advise our clients to choose. Under North Carolina law, a creditor can petition the court to administer the estate. Once granted authority to act, the creditor can force the sale of any estate property in order to pay the proper debts of the estate. Sometimes family members will jump in to pay the debt at this point because they do not want the real estate sold but other times a sale is made, the creditors are paid and anything left goes to the rightful family members.

The attorneys at Law Firm Carolinas in Greensboro and Charlotte have a lot of experience representing creditors and helping them recover amounts that are justly due to them, even after the debtor has died. If you are owed money and would like to discuss this option, please contact our estates department.

Estate Planning & Admin