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Detailed Answer

Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a licensed attorney in New Mexico for guidance on your specific situation.

When someone dies in New Mexico, their estate enters probate. During probate, creditors must present claims against the estate. As a personal representative or creditor, you can negotiate and settle these claims to streamline administration and conserve estate assets. Below are key steps under New Mexico law:

1. Identify and Review the Claim
   Ask the creditor to present a written claim showing the basis, amount, and supporting documents. Under NMSA 1978 Section 45-3-801, creditors must file or mail their claim within four months after the date the personal representative first publishes notice to creditors (45-3-801).
2. Evaluate Validity and Priority
   Verify whether the claim is valid and priority. New Mexico law places administrative expenses, funeral expenses, and taxes ahead of general unsecured claims (45-3-807).
3. Initiate Early Communication
   Contact the creditor promptly. Review their documentation and ask questions to clarify any discrepancies. Establishing an open dialogue can ease negotiation.
4. Propose a Settlement
   Offer a lump-sum payment or installment plan at a reduced amount. Frame your proposal in writing and explain how the estate’s funds and priorities limit full payment. A well-crafted offer often encourages acceptance.
5. Formalize the Agreement
   Once both sides agree, draft a simple settlement agreement. Include: parties’ names, total settled amount, payment schedule, and a release clause relieving the estate from future liability.
6. File Court Documents if Required
   If a creditor objects to allowance or disallowance, file an objection under Section 45-3-803 (45-3-803). Attend any court hearing. Judges can confirm or reject contested claims.
7. Complete Payment and Obtain Releases
   Make payments per the agreement. Request a written release from the creditor once you finish payment. Keep all documents in the estate’s records.
8. Close the Estate
   After settling approved claims and completing distributions, file a final accounting and petition for discharge. The court will issue an order closing probate once it approves the report.

Helpful Hints

• Track all deadlines in writing and set calendar reminders.
• Gather original invoices, contracts, and statements before negotiating.
• Keep communication professional and document every exchange.
• Consider mediation for high-value or disputed claims.
• Retain proof of payment and signed releases to prevent future disputes.