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Ray
Ray, Lawyer
Category: Legal
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Experience:  29 years in civil, probate, real estate, elder law
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do cancellation of debt rules apply to an estate

Resolved Question:

do cancellation of debt rules apply to an estate that negotiates a settlement with a credit cars company that filed a claim in an estate proceeding?
Submitted: 1 year ago.
Category: Legal
Expert:  Ray replied 1 year ago.

RayAnswers :

Thanks for your question and good evening.

RayAnswers :

Can you give me a little more information here.There is an estate and the creditor has filed a claim??

RayAnswers :

Are you an heir here or perhaps the executor/personal representative for the estate?

RayAnswers :

If you can give more information here I will be happy to chat with you.

RayAnswers :

Please get back to me when you are available I will be glad to help you, thanks..

Customer:

I am PerRep of an estate

RayAnswers :

Hi, here if there are assets the creditors can file claims.This includes credit card accounts as well.

RayAnswers :

You can negotiate resolution of their claim as personal representative here.

RayAnswers :

Often a credit card company will agree to a reduced amount to resolve the claim.The personal representative and the estate lawyer can attempt to resolve them.

RayAnswers :

If the situation were that the person deceased without any assets or more debts than assets then probate would not be filed.The creditors in that case have no recourse and must write off the debts.Here is there are sufficient assets they file claims and you try to resolve them as part of the estate administration.

RayAnswers :

Please let me know if you have more follow up.Thanks again.

RayAnswers :

I am still available please follow up if you have more questions.

RayAnswers :

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This communication does not establish an attorney client relationship here.Information provided is not legal advice. Rather it is simply general information.


RayAnswers :

Thanks again for letting me help you.

Expert:  Ray replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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Customer: replied 1 year ago.

You did not answer the question of whether the Estate(which didn't incur the debt) has cancellation of debt income arising out of compromise of the claim for less than the filed amount requested.

Expert:  Ray replied 1 year ago.

The estate here has liability for any creditor claims/debts filed against the estate.Only the estate here is liable for the debts.The personal representative or heirs here have no personal liability.But the estate here cannot cancel the debt.It is liable up to the amount of assets.If the debts here outweigh the assets then the estate is insolvent.

Now the reditor here has to file a proper claim against the estate in probate and there are time limits.

Here is the procedure and time limits for NC probate.

a) All claims against a decedent's estate which arose before the death of the decedent, except contingent claims based on any warranty made in connection with the conveyance of real estate and claims of the United States and tax claims of the State of North Carolina and subdivisions thereof, whether due or to become due, absolute or contingent, liquidated or unliquidated, secured or unsecured, founded on contract, tort, or other legal basis, which are not presented to the personal representative or collector pursuant to G.S. 28A‑19‑1 by the date specified in the general notice to creditors as provided for in G.S. 28A‑14‑1(a) or in those cases requiring the delivery or mailing of notice as provided for in G.S. 28A‑14‑1(b), within 90 days after the date of the delivery or mailing of the notice if the expiration of said 90‑day period is later than the date specified in the general notice to creditors, are forever barred against the estate, the personal representative, the collector, the heirs, and the devisees of the decedent. Provided further, if the expiration of said 90‑day period is later than the date specified in the general notice to creditors, the notice delivered or mailed to each creditor, if any, shall be accompanied by a statement which specifies the deadline for filing the claim of the affected creditor.

(b) All claims against a decedent's estate which arise at or after the death of the decedent, except claims of the United States and tax claims of the State of North Carolina and subdivisions thereof whether due or to become due, absolute or contingent, liquidated or unliquidated, secured or unsecured, founded on contract, tort, or other legal basis are forever barred against the estate, the personal representative, the collector, the heirs, and the devisees of the decedent unless presented to the personal representative or collector as follows:

(1) With respect to any claim based on a contract with the personal representative or collector, within six months after the date on which performance by the personal representative or collector is due;

(2) With respect to any claim other than a claim based on a contract with the personal representative or collector, within six months after the date on which the claim arises.

(c) Except as otherwise provided by subsection (f) of this section, no claim shall be barred by the statute of limitations which was not barred thereby at the time of the decedent's death, if the claim is presented within the period provided by subsection (a) hereof.

(d) All claims of creditors upon whom there has been personal service of notice as provided in G.S. 28A‑14‑3 are forever barred unless presented to the personal representative or collector within the time and manner set out in this Article.

(e) Except as otherwise provided by subsection (f) of this section, unless a claim has been presented pursuant to G.S. 28A‑19‑1 giving notice of an action or special proceeding pending against a decedent at the time of the decedent's death and surviving under G.S. 28A‑18‑1 within the time provided by subsection (a) of this section, no recovery may be had upon any judgment obtained in any such action or proceeding against the estate, the personal representative, the collector, the heirs, and the devisees of the decedent.

(f) All claims barrable under the provisions of subsections (a) and (b) hereof shall, in any event, be barred if the first publication or posting of the general notice to creditors as provided for in G.S. 28A‑14‑1 does not occur within three years after the death of the decedent.

(g) Nothing in this section affects or prevents any action or proceeding to enforce any mortgage, deed of trust, pledge, lien (including judgment lien), or other security interest upon any property of the decedent's estate, but no deficiency judgment will be allowed if the provisions of this section are not complied with.

(h) The word "claim" as used in this section does not apply to claims of heirs or devisees to their respective shares or interests in the decedent's estate in their capacity as such heirs or devisees.

(i) Nothing in this section shall bar:

(1) Any claim alleging the liability of the decedent or personal representative; or

(2) Any proceeding or action to establish the liability of the decedent or personal representative; or

(3) The recovery on any judgment against the decedent or personal representative

to the extent that the decedent or personal representative is protected by insurance coverage with respect to such claim, proceeding or judgment or where there is underinsured or uninsured motorist coverage that might extend to such claim, proceeding, or judgment.

(j) Except as otherwise specifically provided in this section, the limitations on presentation of claims set forth in this section apply to claims by the State of North Carolina, its subdivisions, and its agencies. (1973, c. 1329, s. 3; 1977, c. 446, s. 1; 1979, c. 509, s. 1; 1989, c. 378, s. 3; c. 485, s. 65; 2011‑344, s. 4.)



Here they have six months to file their claims in probate court and have them reviewed and approved by probate court.It is also possible for the executor to negotiate a reduced payment and release of claim.

 

Here are all the probate code laws that deal with claims and probate in NC.See Article 19 here for all of them.

 

http://law.onecle.com/north-carolina/28a-administration-of-decedents-estates/index.html

 



Again please let me know if you have more follow up.I want you to be satisfied.Thanks for your patience.

Ray, Lawyer
Category: Legal
Satisfied Customers: 29925
Experience: 29 years in civil, probate, real estate, elder law
Ray and 6 other Legal Specialists are ready to help you
Expert:  Ray replied 1 year ago.

There is a priority of claims.A credit card--unsecured debt falls in the last category (ninth class)or priority since it does not have say a lien like a house or a car here.
If there are not sufficient funds the higher categories get paid first like funeral expenses, etc.

(a) After payment of costs and expenses of administration, the claims against the estate of a decedent must be paid in the following order:

First class. Claims which by law have a specific lien on property to an amount not exceeding the value of such property.

Second class. Funeral expenses to the extent of three thousand five hundred dollars ($3,500). This limitation shall not include burial place or gravestone. The preferential limitation herein granted shall be construed to be only a limit with respect to preference of payment and shall not be construed to be a limitation on reasonable funeral expenses which may be incurred; nor shall the preferential limitation of payment in the amount of three thousand five hundred dollars ($3,500) be diminished by any Veterans Administration, social security or other federal governmental benefits awarded to the estate of the decedent or to the decedent's beneficiaries.

Third class. Costs associated with gravestones and reasonable costs for the purchase of a suitable burial place as provided in G.S. 28A‑19‑9 to the extent of one thousand five hundred dollars ($1,500). The preferential limitation herein granted shall be construed to be only a limit with respect to preference of payment and shall not be construed to be a limitation on reasonable gravestone or burial place expenses which may be incurred; nor shall the preferential limitation of payment in the amount of one thousand five hundred dollars ($1,500) be diminished by any Veterans Administration, social security or other federal governmental benefits awarded to the estate of the decedent or to the decedent's beneficiaries.

Fourth class. All dues, taxes, and other claims with preference under the laws of the United States.

Fifth class. All dues, taxes, and other claims with preference under the laws of the State of North Carolina and its subdivisions.

Sixth class. Judgments of any court of competent jurisdiction within the State, docketed and in force, to the extent to which they are a lien on the property of the decedent at the decedent's death.

Seventh class. Wages due to any employee employed by the decedent, which claim for wages shall not extend to a period of more than 12 months next preceding the death; or if such employee was employed for the year current at the decease, then from the time of such employment; for medical services within the 12 months preceding the decease; for drugs and all other medical supplies necessary for the treatment of such decedent during the last illness of such decedent, said period of last illness not to exceed 12 months.

Eighth class. A claim for equitable distribution.

Ninth class. All other claims.

(b) Notwithstanding subsection (a) of this section, if payment of the commissions of the personal representative under G.S. 28A‑23‑3(g) would cause the estate to be unable to pay all claims against the estate of a decedent, then the commissions shall be limited to the amount allowed under G.S. 28A‑23‑3(a). (1868‑9, c. 113, s. 24; Code, s. 1416; Rev., s. 87; C.S., s. 93; 1941, c. 271; 1955, c. 641, s. 1; 1967, c. 1066; 1973, c. 1329, s. 3; 1981, c. 383, ss. 1, 2; 1987, c. 286; 1995, c. 262, s. 8; 2005‑180, s. 1; 2005‑388, s. 2; 2009‑288, s. 1; 2011‑344, s. 4.)

 

The personal representative can negotiate resolution of the claim with a creditor.But the estate if it has sufficient assets to pay the higher claims would have to pay these as well assuming they file it timely as per the law above.

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