Presentation on theme: "[already covered] Creditor must file a claim: With PR or court, and PC §§ 298, 308 EC §§ 355.001, 355.002 With supporting affidavit (under oath) containing."— Presentation transcript:
Creditor must file a claim: With PR or court, and PC §§ 298, 308 EC §§ , With supporting affidavit (under oath) containing statutory elements. PC § 301 EC §
Must present claim for money and have it rejected before creditor can receive a court judgment. PC §§ 314 EC §§ Unliquidated claims do not have to be presented. Question 5 – p. 151
General Rule – Any time before: Estate closed, or Statute of limitations runs PC § 298 EC §§
Exception for unsecured creditor who received notice 4 months after receipt of notice (PC § 298) 120 days after receipt of notice (EC § )
Types of Claims Mortgage Deed of trust Article 9 secured interest Creditor has choice of how to proceed.
1. Preferred Debt and Lien Against the Collateral PC § 306(d) EC § CR gets top priority over the collateral, now and later in the hands of purchasers, heirs, and beneficiaries. But, no right to deficiency if undersecured. Presumed if no timely election.
2. Matured Secured Claim PC § 306(c), (c-1) EC § CR must subordinate claim to: First $15,000 of funeral and last illness expenses Family allowance Administration and other estate expenses But, may recover deficiency from other estate assets. Must be timely elected.
If creditor elects matured secured claim status, creditor can get paid now even though debt is not yet due. Why is this permitted? How does a creditor make the decision?
Time for Creditor Election Later of: Four months after receipt of notice, 0r Six months after letters issued.
Timing Must act within 30 days. PC § 309 EC § Three options
1. Accept PR agrees that the claim is valid. Does NOT mean claim will get paid (might not be enough property in the estate).
2. Reject PR states PR will not pay the claim (thinks it is bogus). Creditor must file suit with 90 days of rejection or else claim is barred. PC § 313 EC §
3. Do nothing Claim is deemed rejected if PR does nothing within 30 days PC § 310 EC § Warning to creditor: This starts the running of the 90 day period to file suit. Ethics of advising PR to do nothing to trick non-savvy creditors?
The following rules do NOT apply: 1. No requirement with respect to form in which creditor must present claim (affidavit not needed). 2. No requirement that claim be presented before suit day period for suing on rejected claim does not apply.
1. When administration completed 2. As administration progresses 3. When creditor obtains court order after one year from issuance of letters PC § 320 EC §
Authority PC §§ 320 & 322 EC Chapter 355, Subchapter C Other provisions may also impact the claim order.
1. Federal Tax Lien [and other federal claims] Exceptions from Rev. Rul Funeral expenses Family allowance Administration expenses What is the policy behind these exceptions?
2. Secured Creditor with Preferred Debt and Lien How obtain? Timely election. Failure to elect timely. Priority is only over the collateral. No ability to seek deficiency if under secured.
3. Homestead (or allowance in lieu)
4. Funeral expenses and expenses of last illness up to a combined total of $15,000
5. Exempt personal property (or allowance in lieu)
6. Family Allowance x
7. Administration and related expenses
8. Secured creditor who elected matured secured claim status This priority is for amount that can be realized from the collateral. Deficiency has a lower priority (#13).
9. Delinquent and future child support
10. Certain Texas tax claims
11. Confinement claims But not if convict had: Surviving spouse, Dependent minor child, or Disabled child.
12. Medicaid Recovery
13. Unsecured claims
14. Beneficiaries and Heirs Following the abatement order
Hope v. Baumgartner (p. 157)
Creditor may seek recovery from heirs, beneficiaries, and lower-ranked creditors up to amount received from the estate. Exceptions: Claim barred by statute of limitations Claim barred by the non-claim statute