What Rights Do Creditors Have Against an Estate?If someone owes money at the time of their death, the debt becomes the estate’s responsibility. The executor, the person in charge of managing and distributing the deceased’s assets, can use those assets to pay off debt. Just because someone dies doesn’t mean their debt disappears. Creditors could come after assets left behind to cover the money owed to them.

Creditors can include a range of parties, such as:

  • Heirs
  • Tax collectors
  • Lenders
  • Devisees
  • Medical providers
  • Burial and funeral services
  • Accountants
  • Credit card companies
  • The plaintiff in a tort case against the estate
  • Investment advisers

A creditor can pursue legal action against the decedent’s estate to pay the debt. As long as they file the lawsuit by the required deadline, the parties involved in the estate’s administration must participate in the legal proceedings. This prevents the executor of the estate from transferring assets to beneficiaries until the case is resolved.

Rights Afforded to Creditors During Estate Administration

Any creditor with interests in a deceased person’s estate has specific rights during the probate process. Probate involves a court reviewing and validating a person’s will. Creditors must pursue legal action within two years of the date the estate enters probate. Once the deadline passes, they can’t try to collect on the debt owed to them.

Right to Notification

The personal representative of the deceased’s estate must notify creditors about the death. If the personal representative doesn’t notify the creditors about the death, the court could grant creditors the right to file a claim even after the deadline has passed.

Right to File a Claim

What Rights Do Creditors Have Against an Estate?Upon notification of the deceased’s death, creditors can file a creditor’s claim against the estate. They must follow the deadline and file their case in probate court promptly. Waiting too long could prevent them from pursuing legal action against your loved one’s estate.

Sometimes, the decedent leaves behind unpaid debts. If that happens, a creditor could intercept a beneficiary’s inheritance to repay the money owed to them. That means that if you’re a named beneficiary and the decedent had debt, you might not receive all of the assets left to you in your loved one’s will.

Estoppel and Fraud Defense

The estoppel doctrine protects one party from an opposing party making untrue assertions or choosing not to keep their word. For example, the personal representative of an estate might promise to pay back a debt to a particular creditor without the need for the creditor to file a claim. In this example, imagine that the personal representative had no intention of paying them. The estoppel doctrine would not allow the personal representative to contest legal action by the creditor due to the creditor’s failure to file a claim with the court.

Debts Paid by the Estate

The personal representative must set aside funds to pay for:

  • Federal and state taxes
  • Administration expenses

These claims are a priority over lawsuits filed by other creditors. Setting up a separate account might be necessary to make these payments.

The personal representative must also pay other types of debt to creditors as soon as the funds are available. These debts include:

  • Family allowances
  • Funeral expenses
  • Wage claims
  • Bills associated with final injury or illness resulting in the death

Once the personal representative resolves these debts, other creditors, such as credit card companies and healthcare professionals, can make claims against the estate. Creditors have a right to go after non-probated assets if the estate runs out of money. They could collect payments from payable-on-death assets, trust fund distributions, or transfer-on-death assets.

Holding the Personal Representative Liable

Creditors have a right to hold the personal representative, administrator, or executor of an estate liable for debts the deceased had not yet paid under certain circumstances. For example, if there’s proof of the executor mismanaging the estate’s assets, creditors could pursue legal action.

Sometimes, the administrator or executor is a spouse. Many couples have jointly owned property, such as motor vehicles, real estate, and bank accounts. The spouse might be liable for the deceased’s debts if the estate funds can’t cover all debts owed.

Right to File a Lawsuit for a Rejected Claim

If the estate’s personal representative rejects a creditor’s claim, the creditor has the right to hire a lawyer and litigate their case. By filing a lawsuit, the creditor can pursue a judgment from the court to receive payment of the debt. This type of case is only valid if the creditor initiates their lawsuit in court within 90 days of the rejected claim.

Contact Us

Peck Ritchey, LLC has over 100 years of combined experience in estate administration and litigation. We proudly represent clients in Illinois and fight to protect their rights.

If you face legal action by a creditor and need assistance with your case, call our Chicago probate, trust and guardianship litigation attorneys at (855) 328-5787 right now for a free consultation. We’re available 24/7 to take your call.


Attorney Kyle Fahey handled our matter with skill and professionalism, and was always responsive. 10/10, would work with him and the firm again.

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The peace of mind that Peck Ricthey's office has given me is worth every penny. The services they provided me and my family in an emergency medical situation is beyond outstanding. Last minute notice, Peter Brady and team were compassionate, understanding and most importantly efficient and got the job done. Look no further if you have any needs that this office can provide for you. Definitely in good hands! Thank you, a thousand times over for all of your help.

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I solicited Peck Ritchey, LLC for assistance with a living trust for which I became the beneficiary. I needed assistance with understanding the details of how it all worked. However, I was especially concerned because there were threats of allegations made by family members and a lawsuit was filed against me. I needed a solid professional who had my best interests in mind. Peter Brady took my case and he managed it flawlessly. He explained everything in a way I could understand, he knew the law inside and out, he was always available to answer questions, and even offer support when things seemed like they could become extremely problematic. In addition to this, he had a plan. He navigated the course as if he already knew the next move by the opposing attorney. He made me feel like everything was in control and that’s because he knew exactly what he was doing and he consulted with me about everything. We ended up settling out of court and ultimately the court officially dismissed the lawsuit. I honestly believe if it wasn’t for Peter and his expertise this could have gone in an entirely different direction. Peter did a stellar job and I couldn’t be more pleased and impressed with his performance.

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