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Advice Regarding Deceased Parent's Debt

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Anonymous
Not applicable

Advice Regarding Deceased Parent's Debt

Hello everyone, and thank you for reading this.  To start, my mother passed away in April 2020(not COVID related) and sometime after that I was officially made the executor of her estate in Sept 2020.  My estate lawyer advised me to wait about 7 months and see what creditors come knocking.  In all that time only one has ever contacted me and my lawyer via mail and that was for a Barclays credit card.  A "Statement and Proof of Claim" was received in Oct 2020 regarding this from Phillips & Cohen Associates essentially saying my mother owes $5,368.29 on this card.  My mother had pratically nothing to her name when she died save for a house that is in her name and about $900 I've collected into an estate account.  My lawyer says I cannot put the house in my name until her debts are paid, though I personally do not have to pay the debt of course.

 

I'm currently in information gathering mode and requested my mother's credit report.  So far I've only gotten Experian's but it is showing me something that has caught my interest.  For the Barclays card debt it says there was a "high balance of $5,368" and that the status as of Sept 2020 was: "Past due 150 days. $4,415 written off".  Recent balance shows as: "None reported" with a comment that says: "Account closed at credit grantor's request".  Of note, Phillips & Cohen are nowhere to be seen on her credit report.  Also, if the balance was $5,368 but they say they wrote off $4,415 wouldn't it be true that the real outstanding balance is actually the difference, and NOT $5,368 as P&C says?  For more clarification, the credit report shows a "CO", for "Charge Off", for Feb 2018 through Sept 2020.

 

I'm currently waiting to see what the other two credit reports will show.  Also, as this is a NY state debt, I am planning to send P&C a "Request for Substantiation of Debt" letter to get them to provide more documentation to me.  

 

In the mean time I'm curious as to what you all think.  Am I correct in thinking that the debt is not actually $5,368 or am I misunderstanding what the report is showing?  Any thoughts are greatly appreciated.

8 REPLIES 8
Brian_Earl_Spilner
Credit Mentor

Re: Advice Regarding Deceased Parent's Debt

The grand total is the charge off plus any fees from interest and lawyers. Debt doesn't disappear unless it's paid, included in bankruptcy, or forgiven.

    
Message 2 of 9
Cowboys4Life
Frequent Contributor

Re: Advice Regarding Deceased Parent's Debt

"Charge off" is merely an accounting term that designates the amount due is no longer a profit but now classified as a loss.  It does not negate on the fact that the amount is still owed.  The problem the estate has is if it was charged off in February 2018 that means mom defaulted on payments in September 2017.  This debt has been pending for at least 3 years prior to mom's passing.  The attorney is correct in that the house is considered an asset and no transfer of assets can be done to heirs until all debts of the estate are satisfied.  While you personally don't have to pay the debt the estate does.  If you want to keep the house and title it in your name then this debt will have to be satisfied.

Message 3 of 9
GatorGuy
Valued Contributor

Re: Advice Regarding Deceased Parent's Debt

You already got an answer about the debt.

 

I'll just add I don't know if NY is different but in Florida you make a publication of death and creditors have 3 months to make a claim or they lose their opportunity. So waiting is definitely not what you want to do. I assume since an attorney told you that it's correct but it's definitely backwards of Florida.

Message 4 of 9
203bravo
Established Contributor

Re: Advice Regarding Deceased Parent's Debt

@GatorGuy has a valid point..... did you hire this lawyer or were they appointed? It was not good advice in any way to say let's wait it out for a few months and see who comes calling. You need someone who know probate law in your state. 

 

What is the process of notification - usually notification in local papers... what is the states timeline for creditors to make a claim against the estate or forever be barred - maybe this was the 7 months you were advised?? 

 

Is there any mortages or liens on the proprety? Have 2020 taxes been paid? Are there any laws that may protect the proprety - espeically if you were already living there prior to your mothers death? 

 

Did she have a lenghty illness? If so did you quit a job to take care of her full time, did you you end up having to your your personal money to cover any of her expenses? If you did then can you file a claim against the estate aside from any expected inheritance. 

 

From your post it sounds like the only advice that this lawyer has given that is even partially correct was about transferring the deed. It's not that the debt must be paid prior to transfer of deed rather that transfer of owneship cannot occur until the estate is probated. During probate the amounts to be paid to the claims against the estate will be set and will legally have to be paid prior to transfering any assets to the legal heir(s). 

 

I'm sorry for your loss and wish you all the best. 

Message 5 of 9
Anonymous
Not applicable

Re: Advice Regarding Deceased Parent's Debt

@203bravo In NY state the statute of limitations for any debt is 7 years, so all the concern about being told to wait is moot essentially.  I hired this lawyer as I live in New Hampshire and wanted someone in my mother's county back in NY to handle things.  Plus at a minimum, you must wait 7 months from the date of your court-appointment before closing the estate.  That’s the deadline for any unknown creditors to make their claims against the estate.  You really can't just put a house in your name or dole out anything else to other beneficiaries before creditors are paid(not that there's anything to even dole out for anyone in this case).  Since the statute is so long and P&C reached out within the same year my mother died I don't think I have any avenue to say the debt shouldn't be paid, so far.  Which is why I have questions about the whole write off thing on the credit report.

 

I'll give you some background on my family also.  I have three brothers, all of whom were an enormous drag on my mother both mentally and financially.  All of them dropped out of high school w/ only two of them getting a GED many years later.  One literally sat at home all day, every day smoking cigs and drinking beer.  He still does to this day(40+ years of it!).  Another wasn't too bad but would ask my mom for money more than needed.  He at least has a couple jobs but is pretty poor thanks to bad life choices.  The third and worst of them ended up getting hooked on crack and over the course of many years bled my mother dry of every cent she had.  We're talking well over $50k or so.  My step-father has helped my mother repay a lot of debt incurred from this and he is still repaying a home equity loan that has his and my mother's name on it.  This brother in particular is the sole reason her estate account only has $900 and nothing else, except the house.  My mother is the only one that's on the title for the house which she left to me alone.

 

My step-father, who had been very good to my mother, has been and still lives at the house.  He still works and has done well at keeping everything paid off such as insurance, taxes and the home equity loan.  My mother did not really have a long illness.  She retired(I forget when) but it wasn't long after that she started going down hill.  Once she finally ended up in a nursing home I don't even think a year had gone by before she passed away.  As far as I understand there is nothing outstanding as far as medical bills.  My step-father took care of the taxes for last year while she was still alive for some of it.  It'll be my turn to do that once 2021 taxes need to be done.

Message 6 of 9
203bravo
Established Contributor

Re: Advice Regarding Deceased Parent's Debt

This makes a little more sense....... Thank you for sharing a few more detils I know how incredibly hard tht is - especially to an internet full of strangers. 

 

To address your originl question. I agree that you are not going to have a reason to dispute the entire debt now that a claim has been filed. But keep in mind that you can always offer to settle the account for less and the company may accept it. Also during probate your lawyer can present a defense against any or part of the debt. If I recall the details of your 1st post there was a difference of about 1000 dollars between what was being charaged off and what they are claiming is now due..  I would be surprised if they didn't accept such an offer. During my mother's estate we were able to negotiate with one of her final creditors for less than 1/2 of what they were seeking. Took one phone call and about 10 minutes worth of conversations. 

Message 7 of 9
Anonymous
Not applicable

Re: Advice Regarding Deceased Parent's Debt


 If I recall the details of your 1st post there was a difference of about 1000 dollars between what was being charaged off and what they are claiming is now due..  I would be surprised if they didn't accept such an offer. 


This is what I'm thinking as well, and hoping for right now.  So far in the first talk I had with them, before I got the credit report mind you, they offered me a generous discount of 5% off the $5300(I'm being sarcastic of course).  Plus I've read that these debt agencies on average pay $0.04 per $1 of debt purchased from someone else, like Barclays.  Even if it was .10 per $1 at most they would have spent $500-ish for my moms debt; less if the actual debt was just the difference between the write-off and debt!

 

Thank you for the help so far.  Hopefully I can get some more confirmation that the debt really is just $900-ish and not $5300.  

Message 8 of 9
Save-n-Invest
Established Contributor

Re: Advice Regarding Deceased Parent's Debt

Estates are regulated by the state. Each may have it's own twists. An estate and probate specialist is usually the best place for advice. 

 

Educating yourself about your state is a good idea. Even a probate speciaist may give you goofy self serving advice. Lawyers look out for themselves in many instances.

Message 9 of 9
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