Detailed Answer
When an executor administers the estate of an elderly decedent and faces a creditor claim for a disputed loan balance, Iowa law allows the executor to challenge the claim if the loan terms are predatory or otherwise unenforceable. Below is a step-by-step guide under Iowa statutes.
1. Publish Notice to Creditors
Under Iowa Code §633.250, the executor must publish a notice to creditors in a local newspaper. Creditors then have four months from the first publication date to file valid claims against the estate.
2. Identify Predatory Lending Grounds
Carefully review the loan documents and payment history to uncover potential statutory violations, such as:
- Iowa Code §535.2 – Usury limits on interest rates.
- Iowa Code §714.16 – Prohibitions on deceptive consumer practices under the Consumer Fraud Act.
- Iowa Uniform Consumer Credit Code (Chapter 537) – Defenses for unconscionable or unfair contract terms.
3. Disallow the Claim in Writing
If you determine the creditor’s claim is unenforceable, disallow it in writing pursuant to Iowa Code §633.313. The written notice must state your reasons (e.g., usury, deceptive terms) and be served on the creditor promptly.
4. Defend in District Court
If the creditor sues to enforce the disallowed claim, defend the action in Iowa District Court. Raise statutory defenses such as usury, violation of the Consumer Fraud Act, or unconscionability. You may also file for declaratory relief under Iowa Code §631.9 to have the court declare the obligation void or unenforceable.
5. Obtain Court Determination
The court will evaluate the evidence and determine whether predatory practices bar enforcement of the debt. A successful challenge results in dismissal of the creditor’s claim against the estate.
Disclaimer: This is not legal advice. Consult a licensed attorney for guidance tailored to your estate administration and local rules.
Helpful Hints
- Gather all loan agreements, payment records, and correspondence before challenging a claim.
- Recalculate interest to verify any usurious overcharges.
- Keep detailed records of publication dates for creditor notices.
- Document all communications with the creditor, including emails and letters.
- Consider consulting probate counsel experienced in creditor claim disputes.