Houston County had 22,241 probate filings in the 2021 fiscal year, according to the Texas Judicial Branch. When someone passes away, their estate goes through a legal procedure called probate.
In Texas, this process involves managing the distribution of the deceased person’s assets and settling their outstanding debts. Creditors possess certain rights within the probate process to ensure that they can recoup the money the deceased owed to them.
Creditors must actively participate in the probate proceedings. They have the right to know about these proceedings, which means the estate administrator sends a formal notice. After receiving this notice, creditors must submit a claim to the probate court to assert their entitlement to collect the debt.
Prioritization of debts
The court evaluates and prioritizes claims according to state law. Specific claims, such as funeral expenses and the costs associated with managing the estate, get priority and settle before other outstanding debts. Unsecured debts, like medical expenses, credit card bills and personal loans, usually have a low priority.
The probate court is responsible for assessing the validity of each creditor’s claim. This entails confirming that the debt is legitimate and the deceased individual owes the money. If the court finds a creditor’s claim invalid, it can reject it.
In some instances, beneficiaries, heirs or the estate’s representative may dispute a creditor’s claim. This can happen if they believe the debt is not valid or that the amount is inaccurate. In such cases, the probate court will review and make a decision regarding the disputed claim.
Should the estate’s assets prove insufficient to pay all the valid claims in full, Texas employs a pro rata distribution approach. Under this method, creditors will receive a portion of the balance due to them in proportion to the available assets.
Creditors need to adhere to specific deadlines when filing claims in a probate proceeding. Failure to meet these deadlines may result in the court barring them from making claims. The statute of limitations for creditor claims in Texas probate can vary depending on the type of debt, making it imperative for creditors to act promptly.