How Long do Creditors Have to Collect a Debt in Idaho After a Person Dies

By Lane V. Erickson, Idaho Estate Planning Attorney

The talented Idaho estate planning and probate attorneys in the Racine Law Office have assisted clients for over 70 years with all of their estate planning and probate needs. When it comes to completing a probate for the estate of a family member or loved one who has passed away, one of the major things that is accomplished is dealing with the creditors of the decedent. Idaho law requires that the debts and expenses of the decedent must be paid before any money, or property can be distributed to family members or other loved ones. As a result, dealing with creditors is a big deal when it comes to probate.

Our team of Idaho estate planning attorneys have assisted clients in dealing with creditors through the probate process. We are familiar with the types of creditors that can exist, the types of claims that can be made, and how best to deal with these creditors through the probate process. Our team consists of partners Randy Budge and Lane Erickson and attorneys Nate Palmer and Dave Bagley. Each of the members of our team have years of experience and helping clients through the probate process including dealing with creditors. We are confident that we can help you too.

When it comes to dealing with creditors after a person has passed away, the issue really becomes what type of creditor you are dealing with and whether a probate is filed. The sections below describe the different types of scenarios that can exist when it comes to dealing with creditors.

The first scenario that commonly occurs as when we have known creditors regardless of whether or not a probate is filed. Known creditors would include the bank or other financial institution that holds a mortgage on the home, credit card bills that come regularly, utility bills that come monthly, and any other type of creditor that either sends a regular bill, or that the decedent was making payments to on a regular basis.

These types of creditors have a long trail of documentation supporting the debt they are claiming and their right to receive payment on that debt. So long as the normal statute of limitations on the right of a creditor to collect on its dead has not ended before the person passed away, known creditors have a right to collect their debt based on the regular applicable statute of limitations. This normally would be 5 years for a written contract and 4 years for an oral contract. Our experiences is that the 5 year statute of limitations normally applies.

With this kind of debt, normally the entire amount of debt must be paid off before any distribution can be made to the decedent’s family or loved ones. However, there is an exception when it comes to a mortgage. The statutes in Idaho allow the decedent’s family or loved ones, whoever will receive the title to the home, to continue making the regular monthly payments, rather than having to pay the entire balance off. Most other kinds of debt however must be paid off in full before a distribution can be made to others.

The next kind of creditor that may exist is what we call an unknown creditor when a probate is filed. While it doesn’t happen regularly there are in fact instances where there are unknown creditors. Some common examples would include where the decedent hired a plumber to come in and fix a plumbing problem. The plumber came and did the work. The decedent then died before the plumber was able to get a bill sent to the decedent.

In this example, there is a process through probate by which unknown creditors are notified of their right to make a claim against the estate. This is done by publishing notice to creditors in a newspaper. The statutes in Idaho state that the published notice must occur once a week for three consecutive weeks. Unknown creditors have a four month period of time from the date the notice is first published in which to file their claim with the estate. If the unknown creditor does not file their claim within that timeframe their claim will be cut off.

The purpose of this statute is really two specific things. First it allows the normal probate to occur and distributions to happen in the event creditors do not make claims. This allows individuals who receive distributions from the estate to know that creditors will not come tracking them down after the probate is completed. This also provide some assurance to the personal representative that they have properly administered the estate. The second thing that is accomplished by this statute is that it discourages or eliminates dishonest people from attempting to make a false claim against the estate.

The final scenario that could occur is that there are unknown creditors and there is no probate. In this instance, again the regular statute of limitations applies to a creditor’s ability to collect on the debt that is owed. If an unknown creditor doesn’t take any steps to collect on the debt, the law will not protect them and will not allow them to make any type of legal demand on the decedent’s family or loved ones after the required period of time has gone by.

Our firm has a good deal of experience in dealing with creditors both through the probate process and outside of that process as well. If you have questions or concerns about creditors of an estate or of a family member or loved one who recently passed away, we can help.

Our experienced Estate Planning team of attorneys can help you and your family with your Idaho estate plan or with your probate needs. Whether you are seeking your own customized Estate Plan or need a Probate for a loved one who has passed, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation with the Racine Olson team. You can also email us directly at racine@racinelaw.net. We will answer your questions and will help you solve your Idaho Estate Planning and Probate problems.