Legal Question in Credit and Debt Law in North Carolina

Their estate - if there is any property owned, it goes into the estate. Many times, creditors get nothing.

I agree with Ms. Coleman. However, you do not provide enough information. When did the person die? Did he or she have a will? What assets did the elderly person have and how were they titled?

The proper procedure when someone dies is to probate an estate. If there is a will, the person named in the will is the personal representative. If there is no will, then its usually next of kin or any other party. You indicate there is no spouse or children. Are there grandchildren? Siblings? Nieces or nephews?

The task of the personal representative is to figure out what the deceased person owned and owed, pay the bills/just debts and then distribute what is left to the beneficiaries.

You indicate that there are a lot of debts. If there are enough probate assets to pay claims, then all claims must be paid before any heirs get anything. If there are more debts than assets, claims get paid in order of priority. Priority is administrative expenses (paying an estate attorney, costs of probate, paying the personal representative a commission, etc. are administrative expenses). Then come funeral bills up to $3500, then taxes, then health care costs incurred in the last year prior to death and any Medicaid liens and then dead last are things like credit card debts. If money runs out at a higher level lower level creditors get nothing. However, the personal representative is required to notify all the creditors about the estate. The personal representative also has the ability to compromise any claims. If there are probate assets, I would suggest that you go and see a probate attorney who practices in the county where the deceased lived at the time of his/her death.

There are some cases where probate is not necessary, as in where the deceased had no probate assets. An example would be someone who lived in a nursing home and who was on Medicaid. Another example might be someone who rented an apartment, did not have a car and who only had a joint checking account with a relative or friend.

In such case, what I suggest is that the next of kin write a letter and send it certified to all of the known creditors of the deceased. The letter advises that the deceased had a debt with the creditor, that the deceased has died (send a copy of the death certificate), indicate how the next of kin is related to the deceased (such as the writer is the nephew or whatever), advise that the next of kin is not liable for the debts of the deceased, that the deceased owned no assets justifying probate and that no estate will be probated. Advise that the creditor should not bother the next of kin any further. That is enough for cases where there are no assets.

However, whoever is the next of kin should consult with a probate attorney to find out of probate is needed. Failing that, contact the clerk of the probate court and find out if probate is needed. If so, the clerk will have the necessary forms for the next of kin to commence the process.