Can a Probate Estate Administrator File for Bankruptcy for a Decedent?

Whether an estate administrator can file for bankruptcy for a decedent is a common question. In Oklahoma, the role of the estate administrator (or executor) is to handle the decedent’s financial affairs according to probate law, but filing for bankruptcy on behalf of the deceased raises important legal questions. We will cover the basics here regarding the rights of an administrator and how they pertain to bankruptcy.

Can an Estate Itself File for Bankruptcy?

A decedent’s estate, as a legal entity, cannot file for bankruptcy. Bankruptcy law is for living individuals or active business entities. Once a person passes away, their financial obligations transfer to their estate, and debts go through the probate process, not bankruptcy court. As an estate administrator, your responsibility is to:

• Inventory the decedent’s assets.
• Notify creditors of the death.
• Pay valid debts and taxes from estate assets.
• Distribute remaining assets to heirs or beneficiaries.

Before distributions to heirs, Tulsa probate courts prioritize creditor claims based on statutory guidelines, such as funeral expenses.

What if the Estate Is Insolvent?

If the estate’s debts exceed its assets, it is insolvent. In this situation:

• The administrator does not personally owe the decedent’s debts.
• The probate court will prioritize and partially pay debts based on available funds.
• Some creditors may not receive full repayment, but the unpaid debt does not transfer to heirs (with few exceptions like co-signers).

Further, creditors have a short window of time to present their claims to the estate. This is usually a two (2) month timeframe. If a creditor files before the presentment date, their claims are protected. If they file their claim after the presentment date has passed, they are usually barred from collecting from the estate.

What About Personal Guarantees or Co-Signed Debt?

While the estate itself cannot declare bankruptcy, heirs or co-signers may still be liable for jointly held or co-signed debts. In such cases, if they cannot repay the remaining balance, those individuals may consider filing for personal bankruptcy. This is especially significant for individuals who may be liable for their deceased spouse’s medical debt.

Ultimately, the ability to file for bankruptcy will always come down to qualifying. If you make more than the means test allows for filing a Chapter 7 bankruptcy or do not make enough to complete a repayment plan in a Chapter 13, you will need to repay the debts.

Can a Bankruptcy Petition Be Filed Prior to Death?

If the decedent had started a personal bankruptcy case before death, the administrator may sometimes continue certain aspects of the case with the bankruptcy court’s permission. However, this situation is rare and depends on the bankruptcy chapter (Chapter 7 vs. Chapter 13). To know if this applies to your situation, it’s crucial to seek the legal advice of an attorney. They will be able to go into the ins and outs of what you can do within the parameters of Oklahoma law.

Tulsa Bankruptcy Attorneys

If you are managing an insolvent estate in Oklahoma, it’s essential to consult with an experienced probate attorney to understand your duties and legal protections. While an estate administrator can’t file for bankruptcy on behalf of a deceased person, legal processes are in place to address outstanding debts fairly and according to state law. Our attorneys at Kania Law Office are equipped with the expertise to help you with your estate planning needs as well as bankruptcy. We will Call us today at 918-743-2233, or reach us on our Ask A Lawyer page for more help.