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Navigating Debt Collection After Death: What Happens If A Debtor Dies?

On Behalf of | Feb 14, 2024 | Business Debt Collection, Commercial Debt Collection, Ethical Debt Collection

Inevitably, a business may find themselves in a situation where a debtor or business owner dies with an outstanding bill. This is obviously a sensitive topic and can be a complex issue for a creditor. Understanding the legal and ethical implications of collecting a debt from an individual’s estate is crucial for businesses to handle the situation appropriately and respectfully.

At Law Offices of Alan M. Cohen & Associates LLC, our commercial collections attorneys have more than 50 years of combined experience providing debt collection assistance to a wide variety of businesses. We can provide dedicated legal support and guidance for complicated and sensitive issues.

What happens to the debt?

When a debtor dies, their outstanding debts do not die with them. Instead, those financial obligations become the responsibility of the debtor’s estate. However, there are some important things to know:

  • Under Massachusetts law, a creditor has one year from the date of the debtor’s death to make a claim on a debtor’s estate for the amount owed to them.
  • If you were in the midst of a lawsuit regarding the unpaid debt, under Massachusetts law, the lawsuit can still proceed against the decedent’s estate.
  • Any attachment or lien on a property must be settled before the title can transferred to an heir of the property.

The named executor of the decedent’s estate will oversee the administration of the debtor’s estate. The executor will also facilitate the payment of debts. As a creditor, it is important to adhere to the legal procedures for submitting a claim against a decedent’s estate.

Ethical considerations of collecting on a debt

Following a debtor’s death, surviving family members will most likely be struggling with the loss of their loved one. However, you also have every right to protect your company’s business interests. Approaching the situation with compassion and understanding can help ease the emotional strain on the debtor’s family. A little bit of patience might also be required before your company can attempt to secure the payment of the debt.

Consult an experienced commercial litigation collection attorney

The death of a debtor presents a unique challenge for a creditor. However, by balancing compassion with the pragmatic need to settle an outstanding debt a company can navigate the situation appropriately. Our commercial litigation collection attorneys have extensive experience in all types of debt collection.

If your business is dealing with a situation in which a business owner or debtor passed away, consider seeking legal advice. Consulting an experienced collections attorney will ensure that you are taking the necessary steps to settle the debtor’s account. Our collection lawyers are available for consultation appointments. You can schedule a consultation by contacting us through our online form or by calling our office at 508-763-6604.