Disclaimer: This article provides general information about New Jersey probate and creditor claims. It does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
Detailed Answer
During probate in New Jersey, you must address creditor claims before distributing estate assets. Follow these steps to negotiate and settle claims effectively and in compliance with New Jersey law.
1. Publish and Serve Notice to Creditors
Under N.J.S.A. 3B:21-20, the personal representative must publish a notice in a local newspaper and mail direct notice to known creditors. Creditors have nine months from the first publication date to file their claims.
2. Present the Claim
Creditors must submit a written claim to the personal representative. Per N.J.S.A. 3B:21-21, the claim must state the amount owed, the basis for the debt, and attach supporting documents. File a copy with the Surrogate’s Court in the county where probate is pending.
3. Review and Analyze the Claim
The personal representative evaluates each claim’s validity. Verify the amount, confirm the debt’s basis (for example, invoices or contracts), and check that the creditor complied with filing deadlines.
4. Negotiate the Claim
If you believe a claim is valid but overstated, propose a settlement. Offer a reduced lump-sum payment or a payment plan. Put all settlement offers and responses in writing. A clear written record helps avoid future disputes.
5. Resolve Disputed Claims
If the creditor rejects your proposal, file a formal objection with the Surrogate’s Court. The court follows New Jersey Court Rule 4:87 to schedule a hearing. At the hearing, present documentation—such as invoices, contracts, or correspondence—to support your position.
6. Obtain Court Approval and Close the Claim
Once you and the creditor agree to terms, submit a written settlement agreement and a proposed court order. The Surrogate’s Court will review and, if appropriate, approve the settlement. After the court issues its order, pay the creditor from estate funds and file a final accounting with the court to close the estate.
Helpful Hints
- Act promptly to meet statutory deadlines and avoid barred claims.
- Maintain organized records of notices, claims, and communications.
- Consider mediation for complex or high-value claims.
- Use certified mail or courier services to track notices and filings.
- Consult an attorney if you face multiple or contested creditor claims.