HellBill » Hell Bill Area: » Bill Collectors » If house / car in estate is paid out of estate funds, can other creditors sue estate to still sell house/car

  #1 (permalink)
: Just opened probate which includes 1 house (mortgage still due) and 1 car (with payments still due)...also other debt, all unsecured. If cash in estate bank account is only enough to pay attorney, taxes and to pay off mortgage and car, can unsecured creditors still petition court to sell house/car?

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  #2 (permalink)
: 1.) The first bill that gets paid is the funeral director.

2.) If "unsecured creditors" means "credit card lenders",
there is a good chance the deceased person's account had account balance life insurance.
If so, that matter is settled.

3.) All of these things vary by state.
Get a lawyer now.
Spend no money that is not an emergency expense unless you get your lawyer's OK.

4.) If the car is more than a few years old, it probably is not worth nearly enough for an unsecured creditor to sue in an attempt to recover the car's value. The value in court almost certainly would be the wholesale value of the vehicle. That is likely to be a lot less than the cost of attorney's fees to sue.

Under NO conditions whatsoever should you try to get any property unencumbered from a lien or mortgage unless your lawyer tells you to do so. Unless a lawyer who is bound to work for you by a written agreement tells you to clear the mortgage or to pay of the car, DO NOT pay off these things yet. It might be a good idea to let the payment get a bit behind, so the property looks even less attractive to third-party bill collectors.

Ask a lawyer about all of these things.
Pay NOTHING that is not an emergency expense unless a lawyer tells you to pay.

Peace be with you.
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  #3 (permalink)
: yes.

the required order of use of funds and assets in most states is: taxes, attorney [Executor's fee], costs of final illness, funeral, and then creditors. Except that the mortgage holder has first call on the value of the house and the lien holder on the car similarly has first call on its value. unsecured creditors, however, can force the sale of either or both the house and car in order to apply the net proceeds [after the lien holder with first call is paid off] to settle their claims.

heirs receive nothing until after all debts are paid or extended. note that extension of the mortgage is usually automatic, but the car loan may require payment in full if the obligated person has died.

aside to "Uncle Joe" above -- the Executor is legally bound to do his job as the law requires. If he fails to do so, he can be personally sued by the creditors who were not paid. this opens up another pot of money beyond the wholesale value of the car or distress sale value of the house or funds in the estate. creditor would also ask the court to award them attorney's fees, so the Executor who doesn't do his job correctly ends up losing completely and, quite possibly, out of his own pocket.
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