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Kentucky Bankruptcy, Business, Probate Lawyers

Can You Collect Debt from a Deceased Person in Kentucky?

A Probate and Estate Planning Lawyer Can Help You Collect Debt

If someone dies and owes you money in Kentucky, you are entitled to collect those debts from the deceased person’s estate and even get what is due to you before remaining assets are distributed to beneficiaries.  After a death, Kentucky requires most estates to go through the probate process, which involves identifying and valuing the assets, paying off debts, and distributing the remaining assets to the beneficiaries or heirs. Probate can protect creditors and the personal representative of the estate, and it can also ensure that debts are paid and the estate is properly distributed according to the deceased person’s will and state law.

During the probate process, creditors are able to make claims against the deceased person’s estate, which is a legal entity that comprises all the assets and liabilities of the deceased. However, probate is complicated and has many rules as to how and when to make a claim against an estate and how assets are to be distributed. To ensure you can collect the debt that you are owed, it can help to have legal guidance from a probate attorney who can evaluate your situation, file a claim on your behalf and protect your rights.

Order of Paying Debts in Kentucky

Kentucky statute 396.095 establishes a specific order of priority for paying off debts from a deceased person’s estate. The personal representative or administrator who is responsible for making payments and distributing assets is required to file an inventory of assets and their values at the time of the death with the Court within 60 days of the appointment. Assets are then distributed in the following order:

  1. Costs of administering the estate. These are expenses that may include legal fees, court costs, CPA fees, personal representative fees, and other fees related to the administration of the estate.
  2. Funeral expenses associated with the deceased person’s funeral and burial.
  3. Taxes with preference under federal law and other laws of Kentucky — usually taxes, debts owed to the state or federal government, and child support.
  4. Debts and other claims.

In order to collect on debts, there must be enough money left in the estate after the higher-priority items are paid.  Then priority is given to secured debts — those backed by collateral, such as a mortgage or car loan, since if these secured debts are not paid, creditors can repossess the item or foreclose on the collateral. Unsecured debts which are not backed by collateral, such as credit card debt or medical bills, are generally lower in priority and may be paid only if there are sufficient assets remaining after paying higher-priority claims.

How Debts of a Deceased Person are Settled in Kentucky

After a death in Kentucky, a personal representative is appointed to handle the estate distribution. The personal representative is either an executor or an administrator, depending on whether there was a valid will. When someone makes a will, they are required to name an executor, and if the named executor is unable or unwilling to serve or if there is no will, an administrator is appointed by a court.

The executor or administrator ensures that the estate’s debts are paid properly and in the correct order of priority. They must notify known creditors of the probate process, provide them with an opportunity to file claims, and review and verify the legitimacy of these claims.

To file a claim, you must do so in writing to either the personal representative or the clerk of probate court. If filed with probate court, you must also send the personal representative a copy of the claim for it to be considered valid. You must file any claims against the estate within 180 days (6 months) from the date the personal representative is appointed, and then valid debts can be paid after the six months are up.

If you fail to file a proper claim within this time frame, your claim will be barred, and you will not have a right to payment from the estate.

Can I Collect a Debt from the Deceased Person’s Family?

In most situations, you cannot collect a debt from a deceased person’s spouse or other family member. However, if there is not enough money in the estate to cover all debts, there are some situations where a family member or other party shared responsibility for the debt, and therefore may be responsible for paying the debt. Examples of these situations include:

  • The person is a co-signer on a loan with the deceased and the loan has outstanding debt.
  • The person is a joint account holder (not an authorized user) on a credit card with the deceased.
  • There is a legal contract that obligates the person to pay any of the balance beyond what is paid from the estate of the deceased.

Even if the spouse or family member is the executor, administrator, or personal representative of the estate, they are not responsible for paying the debt unless the debt is also theirs. The Fair Debt Collection Practices Act (FDCPA), states that debt collectors may not harass, oppress, or abuse any third parties they contact, even if a family member is legally responsible for a debt.

Get Help from a Kentucky Probate and Estate Planning Attorney

Whether you are planning your own estate or trying to collect debt from a deceased person in Kentucky, the experienced probate and estate planning attorneys at Bunch & Brock can help. We are accomplished legal professionals ready to assist you and provide comprehensive counsel along with friendly, personal service. We have helped many people throughout Kentucky with their estate planning needs and the probate process, and we can do the same for you.

Put our experience to work for you and let us help you navigate the complexities of collecting debts from a deceased person, and any other probate or estate planning issues you encounter. Call us today to get professional legal counsel so that everything is handled correctly and fairly and you get what you deserve.

Please call to schedule an initial consultation at 859-254-5522.