Dealing With Creditors’ Claims Through Probate

For many Americans, debt is a necessary part of life. Aside from the most fortunate among us, without borrowing money, we would not be able to afford our houses,  our cars or our children’s college education. So what happens if you pass away leaving unpaid bills? Oklahoma’s probate laws provide a process to deal with creditors. Here’s how it works.

The probate court appoints an individual to manage the deceased’s estate, called a personal representative or executor. The personal representative is responsible for notifying all known creditors of the deceased by mailing them a copy of the notice to creditors. The notice to creditors is also published in the newspaper. Creditors then have two months to come forward and present their claims to the personal representative, who can allow or deny the claims. With respect to claims the personal representative approves, they are paid in order of priority from the estate’s assets as directed by the probate judge. All claims of a class are paid before moving on to claims of a lower class. If there are insufficient funds to pay all claims of a particular class in full, the creditors in that class receive partial payment on a pro rata basis. Claims of a lower priority go unpaid. In this sense, probate can function much like bankruptcy. Any creditors who do not present their claims within the two month time limit are legally barred from pursuing such claims in the future; the claims which were not presented are extinguished.

We tend to think of probate as a mechanism for transferring property to the deceased’s heirs. However, probate also enables family of the deceased to deal with unpaid debts and relieve that burden.

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