FAQ — What steps can be taken to verify or contest a creditor’s payoff quote on an estate debt?
Detailed answer — Verifying and contesting a creditor’s payoff quote in New Mexico
When someone claims the estate owes a debt, the personal representative (executor or administrator) must evaluate the claim carefully before paying. In New Mexico, the probate code governs how claims against an estate get presented, allowed, or disallowed. See NMSA 1978, Chapter 45 (Probate Code): https://www.nmlegis.gov/Legislation/Statutes/Chapter/45.
Below are practical, step-by-step actions you can take to verify a payoff quote and, if appropriate, contest it.
1) Get the creditor’s payoff in writing and ask for an itemization
Request a written payoff quote that states:
- the principal balance;
- interest rate and how interest was calculated (per diem rate and “through” date);
- each fee, charge, or arrearage included (late fees, collection fees, attorney fees, insurance advances, escrow advances, etc.);
- the date the payoff is valid through;
- the name of the party they claim is owed (original creditor vs. current assignee); and
- the account number and account statements that support the figures.
2) Confirm the creditor’s identity and chain of title to the debt
Ask for documentation that proves the creditor actually owns the debt or holds a judgment or lien. This can include:
- the original contract or promissory note (or a copy);
- assignment documents if the debt was sold or assigned;
- recorded mortgage, deed of trust, or judgment showing a lien on real property;
- proof of the account’s transaction history and recent statements.
3) Check the numbers yourself
Using the documents the creditor provides, re-calculate the payoff:
- verify the principal balance;
- confirm the interest rate and calculate interest only up to the payoff date they gave;
- verify whether fees were authorized by contract or statute;
- look for duplicate charges (e.g., repeated collection fees); and
- confirm any payments applied after the alleged payoff date.
4) Run standard public searches
Do a lien and judgment search in the county where property sits and in statewide records. If the creditor claims a lien, make sure it is properly recorded and still effective. For mortgages and deeds of trust, verify the public record entry and its priority.
5) Check probate notice and claim deadlines
The personal representative has duties under New Mexico probate law to notify creditors and to provide opportunities to present claims. See NMSA 1978, Chapter 45 (Probate Code): https://www.nmlegis.gov/Legislation/Statutes/Chapter/45. If a creditor missed the probate claims deadline, the estate may have grounds to disallow the claim. Conversely, timely-filed claims get formal review. Confirm any claims bar date that was set in the probate matter.
6) Object early if the quote looks wrong or unauthorized
If you are a beneficiary or the personal representative and you believe the payoff quote is incorrect, submit a written objection in the probate file (or ask the personal representative to do so). The probate court can schedule a hearing to determine whether the claim should be allowed and in what amount.
7) Use discovery tools if the creditor resists
If the creditor declines to provide supporting documents, you can obtain evidence through the probate court’s procedures (motions to compel, subpoenas for documents, depositions) or through a civil lawsuit if necessary. Work with a probate attorney to choose the proper procedural route.
8) Consider settlement, mediation, or forensic review
Many disputes resolve by negotiating a reduced payoff, a payment plan, or mediation. For complex accounting disputes, a forensic accountant can audit the creditor’s calculations and locate improper charges.
9) Protect estate assets while dispute is pending
Don’t make large payments until you verify the claim. If the personal representative pays a claim that later proves invalid, the estate may be harmed and beneficiaries may have claims against the representative for improper distributions. If a creditor threatens foreclosure or garnishment, consult a lawyer promptly to preserve estate interests and to determine how to respond in probate court.
10) Know when to get an attorney
Contact a New Mexico probate attorney if the creditor refuses to provide documentation, if the claim is large or complex, if the creditor is a debt buyer with poor documentation, or if the estate is near insolvency. An attorney can file objections, seek discovery, request an accounting, or initiate litigation on the estate’s behalf.
Helpful hints
- Ask for a payoff quote in writing and save every email, letter, and statement.
- Compare the creditor’s figures to the decedent’s bank statements and payment history.
- Require payoff quotes to be valid only for a short period (e.g., 10–14 days) and to state the “through” date.
- Verify the creditor has authority to collect: check for a recorded assignment or a judgment).
- Don’t pay personal creditors out of your own funds unless you get a signed release or written agreement from the estate or probate court.
- If a mortgage or deed of trust is involved, obtain a title/lien search so you know the lien priority and whether a release will be required upon payment.
- Document every interaction: note dates, names, phone numbers, what was said, and keep copies of documents.
- If the estate is insolvent or near-insolvent, get legal advice quickly—priority and allowance of claims become critical.
- When in doubt, ask the probate court clerk what claims procedure applies in that county and whether a claims bar date has been set.
Common documents to request from the creditor
- Written payoff statement with per-diem interest and valid-through date.
- Account statements for the last 12–24 months and the original contract or loan documents.
- Assignment of debt or chain-of-title documents if sold/transferred.
- Recorded lien, mortgage, or judgment documents (recording number, date, county).
- Itemized list of all fees and the legal basis for each fee.
Sample short payoff request (use as a template)
“Please provide a written, itemized payoff statement for account [acct#] showing principal, per-diem interest through a specified date, all fees and charges, and the legal basis for each charge. Please also provide copies of the original note or contract and any assignment or sale documents showing current ownership. This request is made on behalf of the estate of [Name], in the probate matter presided over in [County] Probate Court.”
Where New Mexico law matters
New Mexico’s probate statutes set procedures for presenting and objecting to claims against an estate. See NMSA 1978, Chapter 45 (Probate Code) for the governing rules and procedures: https://www.nmlegis.gov/Legislation/Statutes/Chapter/45. If a creditor’s claim is filed in probate, the probate court determines allowance, disallowance, or reduction of the claim according to those rules.
Disclaimer
This article summarizes general information about verifying and contesting creditor payoff quotes under New Mexico probate practice. It is not legal advice and does not create an attorney-client relationship. For advice about a specific situation or for help filing objections or motions in probate court, consult a licensed New Mexico attorney.