Creditor Bills

It’s important to understand what is going on with creditor bills.

In Ohio, a most creditors have six months to submit a claim for payment. It’s important to emphasize the term “most” because there are a few notable exceptions. The IRS, Medicaid, and secured creditors (think mortgages) are not subject to these deadlines. Additionally, if the estate owes the executor or administrator any money, then the executor/administrator must file their claim with the probate court within three months of their appointment.

This six months begins to run from the date of the decedent’s death. This six month period runs regardless of whether an estate administration has begun. If there is no estate open and a creditor has a bill to collect, Ohio law has a procedure to collect creditor bills. Essentially, if there is no estate open in probate court, the creditor may begin the administration themselves. If a creditor begins this process, the family members will have the opportunity to take over the estate administration.

The executor or administrator will often ask me, “Why are we going to make the creditor work for their payment?” Well, the answer is quite simple. The role of the executor or administrator is to maximize the value of the estate assets. If a fiduciary pays a creditor who has not followed the proper procedure to get paid, then fiduciary may not have fulfilled their duty to the estate beneficiaries.  There is no since giving money to a creditor who didn’t follow the proper procedure to get paid.

If there are not estate funds available to pay all of the creditor claims, there is an order of priority to pay the creditors with the funds that are available. If the executor or administrator pays anyone out of order, they will have to make things right out of their own pocket. This is why it is important to check with the estate attorney prior to paying any bills.