Pursuing a Creditor’s Claim Against the Probate Estate of a Deceased Washington Resident
You just learned of the death of someone who owed you an outstanding debt. You have heard that once a person dies, their unsecured debts are extinguished. Is this true? Can you still pursue your claim after their death? In Washington, state law (RCW 11.40) provides a mechanism and a rigid framework for creditors to recover their claims, regardless of the death of the debtor, provided certain requirements are met. This article explores the general requirements in Washington for pursuing a creditor's claim during the probate of an estate.
Whether you are a Washington resident, corporate creditor or a third party collection agency, you are allowed to pursue a creditor's claim provided you present a proper creditor's claim within the applicable statute of limitations. The applicable statute of limitations can be confusing and has been the stumbling block for many creditors. Further, the failure to timely present a valid creditor's claim will bar any recovery from the decedent's probate and non-probate assets.
First, if the personal representative properly published a Notice to Creditors and provided actual of notice to the creditor, then the creditor must present the claim within the later of (1) Thirty days after the personal representative's service or mailing of notice to the creditor; and (2) Four months after the date of first publication of the Notice to Creditors.
However, if the personal representative published a Notice to Creditors, but did not provide actual notice to the creditor, a different statute of limitations applies. First, if the creditor was not provided actual notice (only constructive notice via publication), and the creditor was not reasonably ascertainable, the creditor must present the claim within four months after first publication of the Notice to Creditors. However, if the creditor was reasonably ascertainable, the creditor has twenty-four months after the decedent's date of death to present its claim.
As a result, a determination of what constitutes a "reasonable ascertainable" creditor can become critical to the survival of certain creditor's claims. A "reasonably ascertainable" creditor has been defined by the Washington legislature, as "one that the personal representative would discover upon exercise of reasonable diligence." Further, the "personal representative is deemed to have exercised 'reasonable diligence' upon conducting a reasonable review of the decedent's correspondence, including correspondence received after the date of death, and financial records, including personal financial statements, loan documents, checkbooks, bank statements, and income tax returns, that are in the possession of or reasonably available to the personal representative."
If the creditor was "reasonably ascertainable" (but only given constructive notice via publication), the creditor has twenty-four months from the decedent's date of death to present a claim against the estate. It is also noteworthy that if the personal representative did not properly publish a Notice to Creditors, the creditor still has twenty-four months from the date of the decedent's death to present a claim against the estate (even if the creditor was given actual notice by the personal representative). On the other hand, if a Notice to Creditors was published and the creditor was also given actual notice (within the first three months after publication of the Notice to Creditors), the statute of limitations is shortened to four months after the date of first publication of the Notice to Creditors.
Assuming the creditor (or attorney for the creditor) timely presents a valid creditor's claim, the personal representative must allow or reject it (in whole or in part). If for some reason, the personal representative has not allowed or rejected the creditor's claim within the later of (1) four months from the date of first publication of the Notice to Creditors or (2) thirty days from presentation of the claim, the creditor (or its attorney) may serve written notice on the personal representative that the creditor will petition the court to have the claim allowed.
Additionally, if the personal representative fails to notify the creditor of the allowance or rejection of the claim within twenty days after the personal representative's receipt of the creditor's notice, the claimant may petition the court for a hearing to determine whether the claim should be allowed, in whole or in part. If the court substantially allows the claim, the court may allow the creditor to recover its reasonable attorney fees incurred to pursue the claim. With this law in place, why allow a creditor's claim in probate to remain uncollected?
Even if the personal representative rejects a creditor's claim (in whole or in part), the claimant may still pursue their claim, so long as they file suit within thirty days after notification of rejection of the claim. Otherwise, the creditor's claim will be forever barred.
In summary, don't feel like you have to walk away unpaid just because the debtor has died or because the personal representative has ignored you or rejected your claim. We can help. Contact our attorney to discuss legal assistance in collecting your claim in probate.
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