What's on Tap? Episode 5: Collections of Deceased Accounts: The Forgotten Strategy to Enhance Your Recovery
The fifth episode of our popular What’s on Tap? webinar series discusses collections of deceased accounts. Hear how to best handle collections when there’s an outstanding balance due, but the owner has passed away. This episode featured Philadelphia attorneys Scott Best, Cameron Deane, and Andrew Condiles.
This episode’s beer of the day is…
As always, we start the episode promoting a local favorite beer. This time we’re spotlighting Kragle, a citrusy IPA made by Free Will Brewing in Bucks County, PA. If you find yourself in Western Bucks, it’s worth a visit!Now, let’s dive into some Q&A’s from this informative session!
What’s the initial process?
First, you’ll want to confirm that this person has actually passed away. This can be done by obtaining an official death certificate with a raised seal. If you can’t get a death certificate, an internet search may bring up an obituary, however, you should continue efforts to obtain a death certificate for verification. From there, take an inventory of their accounts. Look to see, for example, if it’s a single or joint account. For details on how to follow up and what to do with each, check out the episode.
How will I know if this is a collectible account?
Figure out how much they owe and how much they have. This helps determine the strength of your case in pursuing collections.
What are applicable deadlines?
In New Jersey, you have nine months from the death date to file a claim. In Pennsylvania, you have 12 months. Unfortunately, for the collector, the clock starts when the person dies and not when you’re notified. As the deadlines are state and jurisdiction specific, it is important to check your local rules or contact an attorney to confirm the deadline immediately once you learn of a borrowers passing.
Once you file a claim, how long until you get paid?
It depends on your debt’s priority, as determined by the law.It differs from state to state, but generally, unsecured debts are given the lowest priority. There is some differentiation between debt types and options. For example, if it’s an unsecured loan, there's a right to set off triggered by death. You may then have the right to recover what you can out of the deposit accounts the borrower held with your institution.
For a car loan, you have the right to declare the loan in default. At that point, you can seek to repossess it or require the estate to pay the loan if the heirs wish to retain the vehicle. The estate does not get to keep the vehicle when a balance is owed.
In most instances, credit cards don’t have a right to set-off, under federal regulations, so you’d have to file a claim with the estate.
What is the claim process?
Your first step is to reach out to the appropriate court where the deceased lived. They can answer basic questions, provide claim forms, and identify the administrator/executor appointed who you will send the claim to. (They may also be able to give you a death certificate if you haven’t been able to get one previously).Once you’ve notified the estate, its administrator/executor must legally respond with an admission or denial. Watch the webinar to find out your next steps if the estate denies your claim. There are some nuances you’ll want to consider.
What happens if there’s a failure to file a claim within the applicable time limitations?
Those limitations are non-negotiable, so you wouldn’t be able to file if you missed the deadlines. However, if the debt in question is secured by collateral, the lien will remain in place against the collateral despite the passage of the deadlines. For example, in a home mortgage situation, any mortgage lien or judgments would need to be satisfied in order to transfer the title to the heirs or buyer if the estate sells the property.
What if the administrator doesn’t respond to the notice of claim?
Before filing a suit, you’ll want to look at the scenario in a practical sense. If the estate doesn’t have assets to pay the debt, you may be better off counting it as a loss. Regardless, the administrator is required to respond. The webinar talks through some helpful real-life examples.
In situations where a person has limited assets, what are the downsides of pursuing?
This is a business decision, and it may just not be worth your time, efforts or money to pursue.
If you have any questions about this topic or want to learn more about Weltman’s probate recovery, consumer collections, and/or credit union representation solutions, connect with Scott, Cameron, and Andrew at any time.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
