New Mexico Probate Notice to Creditors & Creditor Claims

If you are tasked with processing a loved one’s estate through probate, you may be wondering, “What is a Creditor’s Claim?” or “What is a Notice to Creditors?”

Probate is the legal process of dealing with a person’s assets and debts after they die. Creditor Claims are an important part of probate.

Creditor Claims

What is a Creditor’s Claim?

A creditor’s claim is a claim by an outside individual or company that the estate of a deceased person owes that person or company money. Creditor’s claims usually arise for one of two reasons: either the deceased person owed the money before they died and now the creditor is asking to be paid, or the estate or deceased person made a promise to pay money (often to an heir) that is not being fulfilled.


What are Examples of Creditor’s Claims?

Common examples of outside creditor claims include credit card companies attempting to collect outstanding credit card balances, tax agencies attempting to collect back taxes owed, mortgage banks attempting to collect past-due mortgage payments on the deceased person’s house, and individuals or companies claiming they are owed money because of the wrongdoing of the deceased person before they died (often a tort-based claim or a claim for breach of contract).


The Process for a Creditor’s Claim

If a creditor files a claim against the estate, the Personal Representative is usually required to evaluate the claim within a specific period of time (typically 60 days after receipt of the claim) and make a decision about whether the claim will be accepted or rejected. If the claim is accepted, then the Personal Representative is typically required to pay the claim out of the estate’s assets after all administrative processing is finished (usually at the end of the probate process). If the claim is rejected, then the creditor typically has 60 days to file a lawsuit against the estate to convince a judge that the claim is valid and must be paid. We are here to help you understand New Mexico probate notice to creditors and the process for creditor’s claims. 

Notice to Creditors

Usually, the time limit for a creditor to file a claim against an estate is one year from the death of the deceased person. The time limit for a known creditor to file a claim is typically sixty days from the date the personal representative provides the creditor direct notice of the claim period. But what happens if a personal representative does not know that creditors claim an estate owes them money? How can a personal representative find out if their deceased loved one has debts that have to be paid?

The answer is simple: a personal representative can publish a “Notice to Creditors” notifying the general public of the decedent’s death and directing anyone or any entity who claims the deceased person owed them money to come forward within four months to file their claim.

If a creditor fails to make the specific deadline for filing their claim, it is often the duty of the personal representative to deny the claim. That’s why it’s important for creditors to follow the Creditor Claims process correctly, and that’s why it’s important for the Personal Representative to follow the “allowance or disallowance” process correctly as well.

Will I Have to Pay my Deceased Loved One’s Debts?

Many people are reluctant to go through the process of probate because they worry they may be stuck paying for the debts of their deceased loved one. Thankfully, it’s generally not the case that a family member or heirs to estate will be required to use their own money to pay a deceased loved one’s debts. Put simply, a deceased person’s debts are paid out of the deceased person’s estate (his or her assets and property), but if there’s not enough money available to pay all of the debts, that simply means many of the creditors will either get a reduced payment or, possibly, no payment at all. But absent misconduct by a personal representative, a deceased person’s family is rarely on the hook for the debts themselves.

Checklist for Processing Creditor’s Claims

Keep in mind that each estate and claim is different, but the general process for handling a creditor’s claim is as follows:

1. Receive and Review the creditor’s claim

2. Determine whether the claim is stale or time-barred (past the Statute of Limitations or otherwise uncollectable)

3. Find out whether the claim is valid (review the claim and supporting documentation to determine whether the deceased person really does or did owe the claimed amount)

4. Accept or reject the claim

5. Notify the claimant in writing of your acceptance or rejection of the claim

6. Litigate any disputed claims, if necessary

7. Include the claim and its resolution in accounting and record-keeping documents

We Can Help with Creditor’s Claims

If you need help processing your loved one’s estate and need guidance on how to handle creditor’s claims against the estate, call the experienced lawyers at New Mexico Probate & Estate Lawyers to see if we can help you. And if you believe a deceased person or his or her estate owes you money and need helping lodging a creditor’s claim, we may be able to represent you to ensure your obligations are fulfilled.

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