Creditors in Probate Cases
Handling creditors in Colorado probate cases is an important job for personal representatives and an important matter to know if you are owed money from someone who has died recently. It might be the situation that the person who died owed a debt, had a loan, owed child support, or simply had unfinished business that needs resolving.
First, a probate must be opened. Someone appointed in a Last Will and Testament, a family member, or even a creditor themselves can open a probate after 45 days.
Second, personal representatives of estates/probates (no longer referred to executors) usually file a notice to creditors publication in a local newspaper. This creates a deadline of approximately 4 months for creditors to present a claim to the estate or else the claim may be denied.
The Colorado Court of Appeals has held that even a “known or reasonably ascertainable creditor must present claims by the published deadline if the creditor has actual knowledge of that deadline.” In re Estate of Sheridan, 117 P. 3d 39, 41 (Colo.App. 2004). In some situations, creditors can also argue for the later deadline of one-year since the date of death to present a claim against the estate under Colorado Statute C.R.S. §15-12-803(1)(III).
Third, if a personal representative of an estate has reason to doubt the validity of a claim that was timely presented or if the claim cannot be paid by the estate, the personal representative may disallow the claim within 63 days of the claim’s presentation by filing a notice of disallowance of claims.
Lastly, a creditor whose claim has been denied must file a petition for the allowance of the claim within 63 days of the notice of disallowance. Many creditors, faced with a court hearing to allow a claim, may choose to forego litigation to enforce the claim. However, the personal representative must act in good faith in determining the validity of the claim and not simply deny the claim because of procedural obstacles.
If you represent an estate or if you are owed money from someone who has recently died, please contact us for a free consultation.