Can a creditor make a claim on an estate if the foreclosure of a property is complete?
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Can a creditor make a claim on an estate if the foreclosure of a property is complete?
If a person dies and the forclosure of their house was already in progress, not yet complete (before the death), can that creditor still make claim on the estate? The house in question is not worth what is owed. The Will for this person has not yet been found but we know there is one.
Asked on September 3, 2011 under Estate Planning, Texas
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
In the probate process, one of the reasons for it is to allow creditors to make a claim to the estate's representative for unpaid amounts owed. Whether or not the lender who has a secured interest in the home that is subject to foreclosure can claim a deficiency for any amount owed on the home depends upon whether or not the loan is purchase money (original loan for the home's purchase) and whether or not Texas has anti-deficiency statutes precluding a deficiency judgment on a purchase money loan.
If the loan is not purchase money and the home sells for less than the amount owed at a foreclosure than what is owed on the loan, then the creditor most likely can claim a deficiency owed and make a creditor's claim to the estate.
I suggest that you retain a wills and trust attorney experienced in real estate law to ascertain the status of the loan for the property that will be foreclosed upon to see if it is purchase money or not.
Good luck.
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