Collecting an outstanding judgment from a living debtor is challenging enough. But what if that debtor passes away? Then what? Collection suddenly gets more difficult. A creditor struggling prior to the debtor’s death will experience new challenges after his passing.
Death Doesn’t Eliminate the Judgment
The first thing to know is that death does not eliminate an outstanding judgment in most cases. Certainly, there are exceptions to the rule. But 99% of the time, an outstanding judgment is attached to a deceased debtor’s estate – just like any other outstanding bills.
Creditors then need to ask themselves how to proceed. Instead of collecting from the original debtor, they are left to deal with an executor, an attorney, or some other personal representative deemed responsible for paying the deceased person’s debts. It can seem like starting over. In some respects, it actually is.
A Basic Outline
Every judgment case is a bit different. Therefore, we cannot lay out a collection process that applies to every judgment. We can give you a basic outline. We will use judgment collection in Washington state as the foundation.
A judgment becomes part of the estate when a Washington debtor dies. Upon the debtor’s passing, the executor of the state is compelled to notify all creditors with a reasonable amount of due diligence. But this can take time. The executor needs to make a comprehensive list of all the deceased person’s debts and then attempt to make contact with each creditor.
State law doesn’t require executors to publish a public notice of the person’s death. But doing so could help with notifying creditors as quickly as possible. From there:
1. Creditors File Claims
All creditors, including the judgment creditor, must then file claims against the estate. With few exceptions, creditors have four months from the appointment of an executor to do so. Failing to file within the allotted amount of time could mean forfeiting any and all rights to collect.
2. The Estate Pays Outstanding Debts
With claims in hand, the estate begins paying outstanding debts. Executors are required to follow the statutory order of priority set out under state law. Funeral expenses are paid first, followed by:
- Last illness medical expenses
- Any wages owed to employees
- Taxes (both federal and state)
- Outstanding judgments and judgment liens
- Mortgages and other secured debts
- Unsecured debts
A judgment creditor is not first in line, as you can see from this list. The best he can hope for is being fourth in line. What if there are insufficient resources to pay the outstanding judgment?
The Judgment Creditor May Be Out of Luck
Washington’s community property laws put the responsibility for certain types of marital debts on a surviving spouse. However, those debts do not include judgments. Surviving family members and heirs are not responsible for an unpaid judgment unless they were named as codefendants in the case. So if the estate doesn’t have sufficient resources to pay the judgment, it could be that the creditor is out of luck.
We have given you a basic outline of what happens to a judgment if the debtor passes away. Note that this information is only general in nature. Remember that the states do things according to their own rules and regulations. Also note that every judgment case is different.
If you have been working on a judgment with no success to date, we invite you to contact the Judgment Collectors team. Money judgments are our specialty. We would be happy to look at your case to determine whether we can help. If we can, we will.