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How to Collect from a Deceased Debtor’s Estate

Posted on in Debt Collection

How to Collect from a Deceased Debtor’s EstateIt is common for a person to die before they are able to pay off all of their debts. As a creditor, you have the right to seek repayment for debts even after a debtor has died. If someone cosigned on the debt, your collection efforts can shift towards the living party. Otherwise, you will be collecting the debt from the deceased party’s estate. Each state has its own rules for how soon creditors must make claims against the estate and how much of the estate is available to creditors. For creditors operating under Illinois law, here are the answers to three basic questions about retrieving debt from a deceased party:

  1. What Priority Do Creditors Have?: A deceased person’s estate must repay the person’s creditors before it distributes assets to beneficiaries. Illinois exempts certain assets from being collected, such as life insurance and retirement benefits. In the event that the deceased person’s debts are greater than their assets, their assets will be distributed based on the priority of each creditor’s claim.
  2. What Are the Deadlines for Collection?: The deadline for creditors to file a claim against a deceased person’s estate depends on whether the estate is going through the probate process. During probate, the executor of the estate must attempt to contact the deceased party’s creditors by delivering notifications to their addresses and posting an announcement in a local publication. If you are notified directly, you have three months to file a claim against the estate. If you discover the notification in a publication, you have six months to file a claim. Without probate, the executor of the estate is not legally required to contact you, but you can file a claim up to two years after the person’s death.
  3. Who Should You Contact About Collecting the Debt?: In most situations, you need to contact the person who has been designated as the executor of the estate in order to file a claim. The surviving family members of the deceased party do not inherit the debt and are not directly liable for repaying you. The exceptions are if one of the family members cosigned on the debt or if family members received assets from the estate without allowing creditors to file a claim.

Contact an Illinois Debt Collection Attorney

Collecting debt after a person has died is a sensitive issue. You need to be proactive in filing a claim while respecting those who are in mourning. A Chicago debt collection attorney at Walinski & Associates, P.C., can navigate the probate process to help you claim the money that is owed to you. To schedule a consultation, call 312-704-0771.

Source:

http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075500050HArt.+XVIII&ActID=2104&ChapterID=60&SeqStart=21300000&SeqEnd=23000000

Illinois Creditors Bar Association Chicago Bar Association Illinois State Bar Association
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