I am a new member, and have a question for a close friend of mine. Here is his story.
He lives in a townhouse, which he paid about 300k for, that is now probably sellable at 200k based on recent sales.
He has no problem making payments on it, and he rents out one of the rooms to a tenant. No problems there financially for him.
However my friend has very little money in general at the end of a month because he accumulated a lot of debt from a medcial condition when he had no healthcare (was unemployed) and he used his credit cards to keep himself from going homeless so most of his earnings go to paying the townhosue and his debt each month.
His father died last month. There was no will. Right now I think the estate is in probate (?). The estate includes a house that could probably sell for 400k, a car that could sell for probably $500, and a van that could probably sell for about $4500. I believe this all goes to my friend since he is the only child and the mother was previoulsy passed. But as of now its all in probate and he cant touch anything to try to sell.
It turns out that his dad owes about $80k to creditors (house, credit cards, other debt, etc.)
Now my friend had very little money to begin with, and had to pay out of pocket for his dads funeral ($6k and now is assuming his dads debt).
Dad had no life insurace (self employed).
I understand that there is probably no way for my friend to get out of paying the mortgage on the house, but I thought I have heard that credit card companies dont always wont pursue debt in the event of a death? Is that true, and if so, what is the procedure? I am not sure the amount owed to credit, but obviously if its small to the cc company maybe they will not try to collect it from my friend?
My friend cant touch anything from the estate because its in probate, but the mortgage company is only giving him I think 1 month off before they expect payments.
Is there anyway that my friend can somehow get an extension on all these debts that he has inheirited from his fathers death?
I mean he is in a difficult situation in that he doenst have any excess money to begin with, and his fathers collectors are expecting payment (house and credit card).
Even if he wanted to sell off his dads assets right now he doesnt have ownership yet.
Is there anway he can get an extension or possibly even have some of the debts absolved (I thought I have heard this happening when a death is involved).
Eventually he has to sell the house, but its in disrepair somewhat, needs to be fixed, and then cleaned out and all his dads belongs nad stuff removed, so it will take some time, but they want their money very soon!
thanks for any advice, and please save the flaming!
*forum tip* : You don't need to obfuscate your identity by referring to yourself as "my friend" when you are a new member. You have no past threads or posts for us to dig up or mock
From what I understand, the credit card companies can pursue getting their cut of your "friend's" estate after everything is settled if there's any equity in that house. It seems there may not be though.
First off, don't pay a dime to the mortgage company if the title is held soley by the father. It won't affect your friends credit either way, and will give you time to consider all option.
In general, if the title of the property wasn't setup to pass automatically (via Lady Bird Deed, trust, etc.), the estate will need to be probated. Through the probate process, letters will be sent to all known creditors and an article run in the local business paper. At that point, the creditor (CC company) must make a formal claim against the estate. The time probably varies per jurisdiction, but something like 4 months. If a claim isn't filed against the estate during that time, it is forever barred. The CC may or may not, depending on the prowess, file a claim. If they don't, they're out of the picture. Since the value of the property is something like $400k, and the total debt is only $80k...it doesn't seem to be a huge problem to pay off the outstanding debt anyways, but, your state might allow for exemptions that will supersede paying the CC debt ($10k or more).
I would talk to a probate attorney familiar with your local laws (or read them thoroughly yourself). And most importantly, don't pay a dime of money to anyone until everything is sorted out and you determine that you're legally bound to pay that creditor. Time and the law is on your side.
Oh, and you don't "inherit" debt. The inheritance you might have otherwise received might possible pay off creditors first, and you're left with what's remaining.
Also, likely the funeral expenses being paid are higher in priority than paying unsecured creditors, as they are essentially last in line...so you could get reimbursed sooner in this instance.
narshe14
Senior Member
posted: Oct. 23, 2009 @ 6:11p
My condolences to you on the loss of your father.
BetterBrainBureau
Member
posted: Oct. 23, 2009 @ 6:32p
hatoraide said: *forum tip* : You don't need to obfuscate your identity by referring to yourself as "my friend" when you are a new member. You have no past threads or posts for us to dig up or mock
Who cares? For all that we care, whether it is himself, his friend, his alter ego, or his 4th personality, we don't care.
It's the internetz, boyz. No one knows you are a dog, or a bear on skates.
BetterBrainBureau
Member
posted: Oct. 23, 2009 @ 6:34p
tripleB said: Pay your friend's dead dad's bills, deadbeat.
BetterBrainBureau said: hatoraide said: *forum tip* : You don't need to obfuscate your identity by referring to yourself as "my friend" when you are a new member. You have no past threads or posts for us to dig up or mock
Who cares? For all that we care, whether it is himself, his friend, his alter ego, or his 4th personality, we don't care.
It's the internetz, boyz. No one knows you are a dog, or a bear on skates.
Read up on the probate laws in the state where the father died and get an attorney. Porquin's post is great, and what he outlined for you is a very likely scenario. It will be required to put the ads in the paper, but it is also the responsibility of the executor (who seems to also be the sole beneficiary) to pay debts for the estate and pay out beneficiaries (himself). If it were proven that the executor knew of debts and still didn't pay, there could be legal challenges after the estate was closed. If you stand to have $300K after debts are paid, it only makes sense to pay them, and then never have to worry about it again. A good probate attorney will make this process go more smoothly, and in some states the fee is fixed (ex. $1500).
bahboy20
New Member
posted: Oct. 23, 2009 @ 8:54p
Thanks for the replies and the advice, esp Porquins. I will pass the info on to him...
Its rather negative/depressing that people assume that its my father who died, but maybe thats a fatwallet thing or some inside joke or common thing to say?
Since I am a newb here I will chalk it up to an inexperienced post on my part ;0
I just posted to try to get some info to pass onto a friend I have had for over 20 years, thanks to those who posted useful responses.
bahboy20 said: Thanks for the replies and the advice, esp Porquins. I will pass the info on to him...
Its rather negative/depressing that people assume that its my father who died, but maybe thats a fatwallet thing or some inside joke or common thing to say?
Since I am a newb here I will chalk it up to an inexperienced post on my part ;0
I just posted to try to get some info to pass onto a friend I have had for over 20 years, thanks to those who posted useful responses.Nah, don't worry about it. Most people here don't believe anything anyone says; but, of course, we're to believe that every one of them makes WAY over six figures...
bahboy20 said: Thanks for the replies and the advice, esp Porquins. I will pass the info on to him...
Its rather negative/depressing that people assume that its my father who died, but maybe thats a fatwallet thing or some inside joke or common thing to say?
Since I am a newb here I will chalk it up to an inexperienced post on my part ;0
I just posted to try to get some info to pass onto a friend I have had for over 20 years, thanks to those who posted useful responses.
Some of the people who lurk here in the Finance Forum are simply here to stroke their own egos. This is a guess, but I'd bet a dollar or two that some of them found out that when they began a subscription to fatandfurryXXXchicks.com, a day later their checking accounts got cleaned out by some industrious entrepreneur from Uzbekistan and they come here to mock others to compensate. Good advice from Porquin - just remember that probate law varies from state to state so your friend should be sure to hire a probate attorney. In some, maybe most, states, the fee for probating an estate is established, either by statute or by custom, as a percentage of the estate, so your friend probably won't need to come up with a retainer fee upfront to hire the probate lawyer since his/her fee will be the first thing paid when the estate is probated and liquidated.
In general, other distant relatives may also share in the net proceeds of the estate since the father died without a will. There will be a distant relative hunt by law in many states. Do a Google search for "Intestate". Wikipedia info on Intestacy is one of many pieces of informtion you will find. Add the state the father died in for a better answer.
The court may nominate a "personal representative". Get that done ASAP. It may be your friend if he is willing to do so. It may be the attorney who handles the estate, but that may add to the attorney total costs. The reason that should be done is I know a case where the collection attorney for a credit card company attemted to get himself named as the estate personal representative in an attempt to get the full collection plus costs plus fees for handling the estate.
When my Brother-In-Law died, the attorney said his widow was not liable for the credit cards since she was an authorized user only. It does not appear the friend was even that. The banks still put the card accounts into collection attempting to collect from her. He may get some phone calls, etc. ASK AN ATTORNEY, but IMO, he SHOULD NOT acknowledge the debt as his. The mortgage company will try to take action before the estate is settled. How that goes may depend on the attorney for the estate.
Regardless of the outcome, it may be a stessful time with phone calls that will press him to accept the debt as his. AGAIN, HE SHOULD NOT DO SO.
hatoraide said: *forum tip* : You don't need to obfuscate your identity by referring to yourself as "my friend" when you are a new member. You have no past threads or posts for us to dig up or mock
Ditto.
Sorry for your loss man, but you gotta be honest with us if you expect an honest answer.
bahboy20 said: Thanks for the replies and the advice, esp Porquins. I will pass the info on to him...
Its rather negative/depressing that people assume that its my father who died, but maybe thats a fatwallet thing or some inside joke or common thing to say?
Since I am a newb here I will chalk it up to an inexperienced post on my part ;0
I just posted to try to get some info to pass onto a friend I have had for over 20 years, thanks to those who posted useful responses.
Keep in mind that the first reply to your original post has a lot going on; between a history of the person who posted, as well as an ongoing joke/phrase used in FatWallet Finance fairly often, to the fact that attempts at humor are commonly used in FW finance for a number of reasons...maybe it's the sometimes dry topics, maybe it's the depressing state of all things financial these days, but like all other things, you can embrace it or fight it or ignore it
The other posts about assuming it was your father - it's not that it's a common thing to say, it's more of a 9 out of 10 people who post about "a friend" are actually referring to themselves (I have absolutely no real, physical evidence to back these numbers up ). If this is the 1 out of 10 times where this is not true, that's a good thing, although you would probably get a little more compassion from even FW Finance's most evil if it were the case
Xnarg
Senior Member - 5K
posted: Oct. 24, 2009 @ 9:46p
germanpope said: ...TribleB swings the bat dozens of times a day...He must be 17?
lousygolfer said: are simply here to stroke their own egos. This is a guess, but I'd bet a dollar or two that some of them found out that when they began a subscription to fatandfurryXXXchicks.comGreen for you; stroking the fat & furry in one post
Porqin has some good advice. Definitely have your friend bone up on the probate laws in his state - it may be worth it in this time of turmoil/sadness to retain a lawyer to handle things, depending on the complexity. I know it helped a lot when my mom was handling her brother's estate (similar circumstances re: debt).
Also, along the same lines - don't pay a dime to any creditors until things get sorted out. They will try to guilt your friend into paying them - tell them to get in line/tell it to the judge, as that is what probate is for. Also - he might want to spring for the call screening service from the phone company, as he will be getting absolutely bombarded with collections calls for the next 6-12 months.
jomarrod said: tripleB said: Pay your friend's dead dad's bills, deadbeat. jerk
I thought it was hilariously over the top, but after all these years, I still have a hard time determining the humor threshhold on FW. It seems to be much more stringent and serious than the rest of the internet
Some good advice from phpld. If the estate has assets, creditors are paid before the heirs. And most generally each "class" of claims is paid before the next "class" of claims. And actually creditors are not the top priority - but they tend to get impatient for some reason. On paper, you open the estate, discover the assets, claims are submitted, claims are approved or rejected, paid claims are paid in the appropriate order, etc.
My experience with my husband's death was that everyone wants to be paid, they want to be paid first, and they want to be paid now. They know dang good and well that probate is a process - that it takes some time - and that there is a certain order in which things are done. But they often try to bypass the whole legal process and make sure they "get theirs" without much regard for the legal process.
I had a bit of a problem with the mortgage company after my husband died. On one hand they said they couldn't even discuss the mortgage with me, nor could I pay on it, until Probate was opened. But it still went into automatic pilot for nasty calls for not paying the bill (that they informed me I couldn't pay). Once probate was opened, they got it all straightened out.
I am not sure if your friend would be the administrator of the dad's estate or not. Or if it would be supervised or unsupervised administration. But as the house IS the estate's major asset, the administrator would have the duty to protect the asset - and should have the power to buy, sell, invest, etc. in whatever way is needed to protect the estate. Upkeep of estate property is generally an allowable expenses of the estate. Making mortgage payments, paying maintenance and repairs, etc. should be costs that can be paid from estate assets while the estate is being probated.
But again, it would be best for your friend to discuss this with a Probate attorney.
phpld said: Read up on the probate laws in the state where the father died and get an attorney. Porquin's post is great, and what he outlined for you is a very likely scenario. It will be required to put the ads in the paper, but it is also the responsibility of the executor (who seems to also be the sole beneficiary) to pay debts for the estate and pay out beneficiaries (himself). If it were proven that the executor knew of debts and still didn't pay, there could be legal challenges after the estate was closed. If you stand to have $300K after debts are paid, it only makes sense to pay them, and then never have to worry about it again. A good probate attorney will make this process go more smoothly, and in some states the fee is fixed (ex. $1500).
kenblakely
Senior Member - 2K
posted: Oct. 26, 2009 @ 11:35p
tripleB said: Pay your friend's dead dad's bills, deadbeat.Why is this getting red? That's the funniest thing I've read today!
On a serious note, My mom and I went thru this issue earlier this year - my dad passed on and he had some outstanding CC debts.
1: The estate can and should pay all the expenses of the funeral, including flying in and providing for relatives. The executor of the estate can levy any expense he wants against the estate, and if it's even marginally supportable it will fly, and the only way it will NOT fly is if some creditor challenges the disbursements. Not likely in small estates. The executor's expenses get paid first, before anybody else.
2: All that stuff above about probate is exactly correct. Laws vary state to state, but it is almost always the case that if a creditor fails to make a claim against the estate in probate, he's out of luck forever.
3: If a valid claim is made against the estate and the estate can pay, in most cases it must. In the case of paying off your dead dad's house, this may require selling the house, unless some survivor is willing to pay the debt.
4: (the important one) if the estate is exhausted and there are still debts outstanding, the creditors are simply out of luck, end of story. Debt does NOT get inherited.
"Debt does NOT get inherited." I happen to know that purveyors of unsecured debt in this country quake at the idea that the general public might absorb the true meaning of this phrase....
bahboy20
New Member
posted: Oct. 28, 2009 @ 10:56a
Thanks for the replies.
Someone posted that the estate should pay for the funeral? What exactly does that mean? My friend told me that he paid for most of the funeral costs on his personal credit card and that his aunt chipped in a little. Was that not the right thing for him to do?
In terms of creditors getting paid first, how does this work? My friends dad was self employed, so he didnt have any life insurance, and he was a contractor and having a hard time make ends meet. He was in debt (total, including mortgage) like $80k or so, and I don't think he had more then $5k to his name in cash.
So once everything gets settled and finalized (I don't even know whats involved) but there won't be much liquid $for my friend to start paying creditors back with...so I guess he just has to start selling everything?
There is the house (since its been in the fam for generatiosn probably has 200k+ in equity in it??), an old beat up ford taurus probably worth a couple hundred bucks, a conversion van worth about $4500.
The assementment of the estate is supposed to be done shortly. Once its in, shoudl he just start selling everything to get his dads debts paid back, or can he get extensions, etc?
I am worried about him having to sell the house fast, and therefore selling it for well below what its worth.
Anyway he can get an extension on any of his debts? It is going to probably take him a lot of time to clean out the house, and get things ready to even sell (furniture, clothes, tools, etc. all have to be cleaned up and removed from the house, etc).
Since my friend has his own place, job, and life, he really only has time on the weekend and I am one of the few people who has actually gone out to his dads house to help physically fix it up.
So is the best advice that as soon as he is able, to try to sell everything to pay off his dads debts, or can he someone get some extra time to do this given the situation? I dont see how he can be expected to pay off his dads debts immediatelty since he probably has to sell off his dads cars and house, which is going to take some time to fix up and then more time to sell.
lousygolfer said: Some of the people who lurk here in the Finance Forum are simply here to stroke their own egos. This is a guess, but I'd bet a dollar or two that some of them found out that when they began a subscription to fatandfurryXXXchicks.com, a day later their checking accounts got cleaned out by some industrious entrepreneur from Uzbekistan and they come here to mock others to compensate.
Shows what you know, it was actually trannyballoonsex.com
asdf83
Senior Member
posted: Oct. 28, 2009 @ 11:28a
bahboy20 said:
I am worried about him having to sell the house fast, and therefore selling it for well below what its worth.
What your friend really needs is a local attorney that knows the laws of the state. It sounds like your friend is in line to get some significant money. 200k house minus 80k debt is still 120k. Why risk a portion of that by making a mistake to save a couple $k on attorneys fees. Not to mention the time and stress he will save. It's obviously a hard time anyway and as you said, he has his own life.
I suspect the mortgage company might be able to force the sale of the house if there is no money in the estate to continue paying the mortgage. On the other hand if the house has been in the family for generations there may be some laws protecting it. The general advice here is good but your friend needs an attorney on his side to make the right choices.
ash78 said: jomarrod said: tripleB said: Pay your friend's dead dad's bills, deadbeat. jerk
I thought it was hilariously over the top, but after all these years, I still have a hard time determining the humor threshhold on FW. It seems to be much more stringent and serious than the rest of the internet It varies. Perhaps you've heard of the cat sh!t house?
Someone posted that the estate should pay for the funeral? What exactly does that mean? My friend told me that he paid for most of the funeral costs on his personal credit card and that his aunt chipped in a little. Was that not the right thing for him to do?
In terms of creditors getting paid first, how does this work? My friends dad was self employed, so he didnt have any life insurance, and he was a contractor and having a hard time make ends meet. He was in debt (total, including mortgage) like $80k or so, and I don't think he had more then $5k to his name in cash.
So once everything gets settled and finalized (I don't even know whats involved) but there won't be much liquid $for my friend to start paying creditors back with...so I guess he just has to start selling everything?
There is the house (since its been in the fam for generatiosn probably has 200k+ in equity in it??), an old beat up ford taurus probably worth a couple hundred bucks, a conversion van worth about $4500.
The assementment of the estate is supposed to be done shortly. Once its in, shoudl he just start selling everything to get his dads debts paid back, or can he get extensions, etc?
I am worried about him having to sell the house fast, and therefore selling it for well below what its worth.
Anyway he can get an extension on any of his debts? It is going to probably take him a lot of time to clean out the house, and get things ready to even sell (furniture, clothes, tools, etc. all have to be cleaned up and removed from the house, etc).
Since my friend has his own place, job, and life, he really only has time on the weekend and I am one of the few people who has actually gone out to his dads house to help physically fix it up.
So is the best advice that as soon as he is able, to try to sell everything to pay off his dads debts, or can he someone get some extra time to do this given the situation? I dont see how he can be expected to pay off his dads debts immediatelty since he probably has to sell off his dads cars and house, which is going to take some time to fix up and then more time to sell.
thanks, You know more about your friend's family and financial situation than I know about anyone, myself included.
I am trying to understand the part where the house could sell for about 400k, the father had about 200k equity in the house, and he owes 80k total, including the mortgage. He shouldn't need an extension on the debts, other than the mortgage. The probate process takes some time and the creditors, for things like credit cards, can't really legally rush that - though they will most likely attempt to put some pressure on your friend to "settle." Settling is not always a bad thing, especially if there will be enough assets to pay the creditors, as they can negotiate to accept less money in order to be paid earlier. But your friend will need to talk to an attorney, because there are so many rules, like you generally can't settle a debt for a "lower class" claim in a way that makes you unable to pay a "higher class" claim.
It seems like the biggest concern at this point is actually protecting the assets of the estate, which is one of the administrator's duties. This would include keeping the house out of foreclosure - i.e. keeping current on the mortgage or renegotiating the mortgage. With $200k equity it sure seems like there would be some options there.
As far as the funeral, it was okay for your friend to pay for it, but it is generally considered an expense of the estate. And it is often considered a first class claim - meaning a claim that will be paid before any of the other classes of claims. So your friend can be paid back from estate funds (when the estate gets some funds) for the amount he spent on the funeral.
It might help to read the probate law of your state, and encourage your friend to retain a probate attorney.
In terms of creditors getting paid first, how does this work? My friends dad was self employed, so he didnt have any life insurance, and he was a contractor and having a hard time make ends meet. He was in debt (total, including mortgage) like $80k or so, and I don't think he had more then $5k to his name in cash. thanks,
Creditors don't actually get paid first. They get paid before heirs. Each state has classes of claims. Each class of claims is paid before the next. Generally expenses for the funeral, administration of the estate, etc. get paid first. Then other expenses, such as taxes, are considered. Creditors are usually way down the list. Expenses of the person (credit cards) generally have a lower priority than expenses of the estate. But creditors get paid before heirs. Heirs are last. Basically, all the expenses are paid, and then whatever is left is distributed to the heirs.
Each state has its own list of classes of claims, but most follow the same basic pattern. If a surviving spouse and / or dependent children are involved - that also plays into it, as a certain amount of assets are generally put aside for support of the surviving spouse and children for a certain time period. The amount can vary dramatically according to the state laws. But this is generally a high class claim (i.e. before creditors).
Actually, the expenses of maintaining the home during probate may very well be considered a first class claim - as it is a cost of administration of the estate - i.e. protecting the assets.
But again, your friend should consult a probate attorney. As the home is the estate's largest asset, they can devise a plan to help protect it until they figure out where they stand and what they want to do about the estate.
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