Disclaimer: This article is educational only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
Detailed Answer
When an elderly person’s estate faces a creditor claim based on a loan with potentially predatory terms, the executor can move to disallow or void that claim under Texas law. The process involves identifying unlawful loan provisions, timely objecting in probate court, and—if necessary—litigating the loan’s enforceability in district court.
1. Review the Creditor Claim and Notice Requirements
Under Texas Estates Code §355.101, the executor must publish and mail notice to known creditors. Creditors then have 120 days to file claims. Once you receive a claim, you have two months from the date of filing to accept or reject it. See Texas Estates Code §355.452 (https://statutes.capitol.texas.gov/Docs/ES/htm/ES.355.htm#355.452).
2. Identify Predatory or Unenforceable Loan Terms
- Home equity loans with impermissible fees or repeated refinancing can violate the Texas Constitution, Article XVI, Section 50 (https://statutes.capitol.texas.gov/Docs/CN/htm/CN.16.htm#16.50).
- Statutory caps on points and fees are set by Texas Finance Code §343.001 (https://statutes.capitol.texas.gov/Docs/FI/htm/FI.343.htm#343.001).
- Predatory lending definitions appear in Texas Finance Code §342.002 (https://statutes.capitol.texas.gov/Docs/FI/htm/FI.342.htm#342.002), which prohibits repeated refinances, balloon payments, and excessive prepayment penalties.
- Unfair or deceptive acts in connection with consumer credit are actionable under the Texas Deceptive Trade Practices Act, Business & Commerce Code Chapter 17 (https://statutes.capitol.texas.gov/Docs/BC/htm/BC.17.htm).
3. File a Formal Objection in Probate Court
Within two months of the claim’s filing, file a written objection in the probate court handling the estate. In your objection, allege specific statutory or constitutional violations. Cite relevant statutes and attach supporting exhibits (loan documents, appraisals, correspondence). The court will schedule a hearing under Texas Estates Code §355.452.
4. Simultaneously Seek Relief in District Court
If you believe the entire loan lien is void, file a separate action in district court to declare the deed of trust invalid based on Article XVI, Section 50. A judgment voiding the lien can enable the probate court to disallow the claim wholly.
5. Attend the Probate Hearing and Present Evidence
At the contested hearing, present expert testimony or appraisals showing the decedent’s equity loss, undue influence, or deception. Emphasize the decedent’s vulnerability as an elderly individual and the lender’s statutory violations.
6. Court Ruling and Next Steps
If the probate court sustains your objection, it will disallow the creditor’s claim. The creditor may appeal, but the estate need not pay under the disallowed claim unless a higher court reinstates it.
Helpful Hints
- Track all deadlines precisely: probate objections are time-sensitive.
- Gather copies of loan closing packets, notices, and payment histories.
- Consult a real estate or probate attorney for help drafting objections.
- Consider expert testimony on elder financial exploitation.
- File any district court suit to void the lien promptly to avoid parallel delays.