We see the following scenario all the time. First the deceased person (the Decedent) owned a home, (assume worth $200,000.00) but the mortgage on the home was worth more than the home (assume mortgage secured a promissory note of $350,000) and there are other assets in the probate estates (assume $150,000.00). In probate this is usually not a large problem if the personal representative is properly represented. First the personal representative should continue paying the on the mortgage. Then the personal representative should publish notice to creditors and send the mortgage company a notice that it must file a claim with the clerk of the probate court within xx days (depending on the situation). Most of the time, the mortgage company does not file a timely claim if the mortgage payments are current when the mortgage company receives the notice to creditors. After the time for filing a claim expires, then the personal representative stops making mortgage payments. The secured real property (worth $200,000.00) will have to be used to satisfy the mortgage (secured creditors do not need to file a claim in property to protect their secured asset). However, unless the mortgage company filed a timely claim in probate, the unsecured portion of the mortgage will not be paid by the probate estate and the $150,000 will go to the estate beneficiaries. This simple example demonstrates the need to hire a qualified probate attorney. For more information contact Cody & Linde, PLLC today.
Timely notice may cut off unsecured probate creditors
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