After someone has died, if the credit card company does not file a claim against the estate within 120 days, then they don’t have to pay the credit card debt. That’s only half true. When there is a Probate, there is an automatic 120-day “Creditor’s Claims Period” that starts when the Court issues Letters Testamentary to the Executor. The Executor is required to give a notice to all the creditors the Executor knows about. The notice tells the creditor that a Probate has been started and the date by which a creditor’s claim must be filed. A creditor must file a claim against the Estate before the end of the 120-day period. If no claim is filed, then after the end of the 120-day period, the creditor is cut off from making a claim. True so far. Here is where it’s not true. The automatic 120-day Creditor’s Claims Period only applies to a Probate. In California, a Probate is only required when the total value of the deceased person’s countable assets exceeds $239,700. When the deceased person leaves assets with a total value of less than that amount, it is considered a “small estate,” and there are other procedures available for the deceased person’s heirs and beneficiaries to claim ownership of the assets. In the case of a small estate, there won’t be a Probate and the automatic 120-day Creditor’s Claims Period won’t apply. Also, when all the deceased person’s assets are held in a Trust, there won’t be a Probate and again the automatic 120-day Creditor’s Claims Period won’t apply. In addition to the 120-day Creditor’s Claims Period, there is a one-year statute of limitations that applies in every case, whether there is a Probate, a small estate, or a Trust. If a person is legally liable based on a contract, a debt owed, or a harm or injury caused by the person, and if that person dies during the time when an action could be brought against that person based on the liability, then an action can still be brought against the person’s estate so long as the action is commenced within one year of the date of death. After the one-year anniversary of the person’s death, no action on the liability can be brought against the person’s estate.
For credit card debt, the 120-day Creditor’s Claims Period may or may not apply, depending on if there is a Probate. But the one-year statute of limitations will always apply.
Lisa C. Alexander, Esq.
JAKLE, ALEXANDER & PATTON, LLP
2001 Wilshire Blvd., Suite 420
Main Line: 310-395-6555