Note: I am already on the hunt for a lawyer, but thought I’d throw this out to the TM. Mods, feel free to move if this is the wrong forum.
My brother S. died last month. His house is paid, his taxes are up to date. He died with no will and no assests except his house. Brother B. has moved into the house and he will continue to pay taxes until he dies (which will be soon since he has liver cancer and the chemo has stopped working).
Brother S. was a deadbeat. He has about $30K in outstanding credit card loans and has judgements against him. Apparently a summons to appear in court has been delivered to his house. Brother B. panicked and threw it away. I say the court needs to be told Brother S. is dead, but Brother B. and Sister N. say “NO. The creditors will take the house and kick dying Brother B. on the streets if they find out Brother S. is dead.”
Can the creditors seize his house? AFAIK, there are no liens against the property (I checked the county property tax records).
Possibly. Assuming S held title in fee simple, the house would be part of his estate. In order to transfer title in the house to someone else, it would be necessary to probate the estate. One of the requirements in probate is to publish a Notice to Creditors. Any creditor can then file a claim against the estate within the time allowed, and if proven valid, any assets in the estate would first go to satisfy those claims. In theory, if the estate was insolvent, this could force the estate to sell the house and use the proceeds to pay the creditors, before dividing any remainder among the heirs.
However…it would be hard for a creditor to legally collect from Person B a debt owed by Person A, if they are not closely, legally related (husband & wife).
I’m pretty sure Person B (Brother B) doesn’t legally own the house of Person A (dead Brother S), however. And even if there had been a will giving it to B, as noted by Oakminster, creditors get first whack at resolving their debts.
I’m not sure what B thinks he’s going to accomplish. If S doesn’t show up in court - and throwing away the notice is not going to stop this hearing - a judgement will still be made.
Heirs aren’t responsible for debt, but the estate is. So the creditors can indeed make a claim against the estate. The creditors aren’t forcing anyone but the original debtor to pay - if the house wasn’t worth what he owed, the heirs wouldn’t be obliged to come up with the remainder. The house doesn’t belong to any heir until the estate is probated and claims are settled.
First, the OP really needs to hire a lawyer. (Strictly speaking, brother B. should hire a lawyer, but I suspect B. has few assets.)
Second, the probate process may actually delay the loss of the house. Once it becomes clear that S. is dead, then the service on him will be no good. Instead, the creditors will have to proceed against the estate, which will probably take longer.
Third, this strikes me as an excellent case for a negotiated solution. Once the creditors are apprised of the facts, they should be willing to agree to a reasonable delay in collection that would allow B. to live out his few remaining days in the house. If they know that they then will be able to get full payment from the proceeds of the house without the expenses of collection, this is a good deal for them. Again, you need a lawyer to be involved to cut the best deal possible for you.
The creditors wouldn’t be collecting the debt from the brother, but from the deceased’s estate. As Oak mentions, the house is an asset in the estate, and before an estate can be distributed, creditors have to be given a chance to make their claims.
Speaking generally, it is never a good idea to ignore a summons from a court. Doing that has a very good chance of making your position worse, not better.
None of the above is intended as legal advice, just to emphasise the need to seek legal advice, from a lawyer who works on this area.
30k is nothing in terms of debt if divided between multiple creditors. It’s likely none of them would find it worth there time to pursue their piece of the pie in probate. If an unsecured creditor gets a death certificate and their interest is less than 5 they are most likely just going to accept the loss and move on.
Ignoring the problem and hoping it goes away is a really bad strategy. When they call simply. Explain he has passed away and you believe the estate to be insolvent.
Assuming the house goes to the heirs all the brothers and sisters need to get together ASAP to formulate a strategy re the value of the house relative to the outstanding debts and the collectibility of same. If they are promoting ignoring the notice I’m going to assume they are financially unsophisticated and prone to making really bad legal and financial decisions. You really do need an atty for this crowd.
If you are named executor of the estate try to get named personal representative so you do not have to mediate every single administrative descision with the heirs.
To the OP: having been through this almost exact same situation myself in 2004 (I didn’t have any court summons to choose to ignore, and would NOT! have even if I had), Oak and others are giving you excellent advice.
Lawyer up, get into court and in front of a Judge, and get it resolved properly and legally so that not only can Brother B. stay there for the reaminder of his time, but the rest of the family may get a little bit out of the sale of the house afterwards (if you even have to).