Over the course of our lives, most of us will accrue debt. This can manifest in various ways – from credit cards & loans to car finance, store cards or friends and family debt. It can be awkward enough trying to chase money that’s owed to you, but what if the person that owes this debt passes away? Becoming a creditor to a deceased person has its complications. There may be assets in the estate – but the estate may still be insolvent.
You need to act swiftly and very carefully.
Creditor claims against an estate are subject to certain time limits, but that doesn’t mean you should make any form of application without taking legal advice first. We specialise in representing clients in England and Wales who are owed money by a deceased person – and by extension by an executor of the estate. Proper legal advice will make all the difference in achieving the right outcome.
The estate may owe you money, but that estate is probably being administered by loved ones in a time of grief.
When discussing probate issues with benefactors or family members, we are required to show the utmost care and sensitivity.
That doesn’t mean that you can’t or shouldn’t make a claim against the estate.
A creditor is an entity that is expected to be dealt with by the executor (or personal representative) of an estate. They may have placed a ‘deceased estates notice’ in The Gazette.
Executors of a will have a responsibility to deal with any claims against the deceased’s estate in a forthright manner. A statutory advertisement in The Gazette and in a newspaper that’s local to the deceased can serve to protect against these claims
Placing a deceased estates notice ensures that sufficient effort has been made to locate creditors before distributing the estate to beneficiaries. This protects the executor or trustee from being liable to any unidentified creditors.
The Gazette is formally the combination of three publications: The London Gazette, The Belfast Gazette and The Edinburgh Gazette. The Gazettes are official journals of record.
The Gazette publishes ‘statutory notices’. This means that there is some legal requirement for the person placing the notice to advertise an event or proposal.
If the executor of the estate fails to place a notice, and a creditor later comes forward (even if the estate has been distributed), they may then have some personal liability for a previously unidentified debt.
If the estate includes a property, notice should also be placed in a paper that’s local to that property, which the executor also had the option to do via The Gazette.
As a creditor, you’ll have around six months from the date of death to put forward any claim that you may have.
What type of creditor am I?
When you are a creditor to a deceased person, it’s important to be clear where you stand in a potentially long line of organisations or individuals who may also intend to make a claim. Examples of creditor types are:
- Real creditors: A real creditor is a financial institution, such as a bank or credit card issuer, that has a right to be repaid.
- Personal creditors: These are friends or family that are owed money.
- Secured creditors: These lenders have a legal right often through a ‘lien’ to property used as collateral to secure a loan. Secured creditors could be considered ‘priority debt’ and may be able to force to the sale of part of the estate such as secured assets (usually a house or car) to recoup money owed. When the sale of such assets is insufficient to clear any balance owed, the remainder would become unsecured debt – and they would be an unsecured creditor for the remaining sum.
- Unsecured creditors: A credit card company for example. The deceased person may owe money, but it’s unsecured debt, meaning that the deceased person hasn’t agreed to give the creditor any property (such as a car or home) as collateral to secure the debt.
A final consideration before you call is whether the amount of money is substantial enough to be worth it. Our view is that debt of a few hundred pounds, while unfortunate, may not be wise to pursue in a formal manner. But if there is an issue of a more substantial sum of money or important assets at stake, we’re certainly ready to help achieve the right outcome for you as a client.
Let’s navigate these issues together.