This is the ninth in a series of posts on the basics of D.C. probate administration and will describe how creditor claims are handled by the personal representative. You can read previous posts in this series including Part I: high-level differences between Virginia and D.C. estate administrations (here), Part II: qualifying to be a D.C. personal representative (here), and Part III: Opening the Estate (here), Part IV: Supervised/Unsupervised (here), Part V: Notice and VCNO (here), Part VI: the Inventory, Part VII: The Account (here), and Part VIII: Priority of Claims (here).
Probate is the legal means of making creditors aware of the death of the decedent and the creditors need to file their claims for debts owed to them by the decedent. As stated before, the personal representative has the Notice of Appointment, Notice to Creditors, and Notice to Unknown Heirs (“Notice“) published. The Notice provides creditors and unknown heirs six months from the date of first publication to file claims against the estate or to contest the appointment of the personal representative.
Creditors that believe they have a claim can file their claim against the estate on a one-page claim form with the Register of Wills and pay a $5.00 fee. Failing to file might extinguish a claim because some creditors have secured rights. For example, a deed of trust recorded against real estate is considered a secured debt and that debt is still owed regardless of filing a claim against the estate. However, creditors with unsecured claims against a decedent’s estate, whether or not such claims are currently due, may be barred from collecting their claim if they fail to present their claim in the manner presented by the statute.
Generally, if the debt is not in dispute, the claims are quickly paid if the assets in the estate are large enough to meet those obligations. However, the personal representative is personally liable to any other claimant whose claim is allowed and who is injured by such payment if:
- the payment was made before the end of the six-month claim period and the personal representative failed to require adequate security from the payee; or
- the payment was made due to the negligence or willful fault of the personal representative
Upon timely presentation of a claim, the personal representative may mail a notice to the claimant stating that:
- the claim has been allowed in the claimed amount;
- the claim has been disallowed in whole or in part and advising the claimant of the procedures and time limitations for contesting such disallowance; or
- the personal representative will petition the probate court for a determination on paying the debt.
The creditor can contest disallowance or partial disallowance.
Further, a creditor that previously presented a valid claim or has a valid judgment that has not been paid within eight months of presentation of the claim, may petition the court for an order directing the personal representative to pay the claim to the extent that funds of the estate are available for such payment. The personal representative should respond to a claimant’s petition within 10 days.