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What happens if estate debts exceed the assets?

Saratoga Springs, NY |

I've been working on getting a relative's estate in order, but I've discovered a real Catch-22 situation. The property has to be sold to pay the debts. I did a judgment search on my own at the County Clerk's office and discovered 2 judgments which added together exceed the value of the estate, this doesn't include outstanding medical and funeral bills. The estate attorney says the property can't be sold until the judgments are settled, but there's no money. What should be done in this situation?

Attorney Answers 3


  1. Best answer

    Administrative expenses of the estate should take precedence over the judgments, but you may need to get probate court authority to sell the property and divide the proceeds. The judgment creditors would likely get a pro rata portion of the proceeds.

    James Frederick

    *** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.


  2. Mr. Frederick is correct. The estates administrative expenses and funeral expenses are generally priority claims against the estate. You would need a court order to sell the property, then the other creditors including the judgment creditors would be able to make claims for their balances.

    When responding to questions posted on Avvo, I provide a general purpose response based on California law as I am licensed in California. In reviewing my response, you are specifically advised that your use of, or reliance upon any response I provide is not advisable. I do not have all relevant background details or facts related to your issue / matter, thus I am not in a position to give you legal advice. Further, your review, use of, or reliance upon my response does not establish an attorney-client relationship between us nor does it qualify as a legal consultation for any purpose. For specific advice regarding your particular circumstances, you should consult and retain local counsel.


  3. I'm wondering if your attorney didn't address this fully for you. Also, were the judgments against the property or the decedent?
    Ask your attorney about compromising the amount so you can offer the creditors something, but still salvage some money for the estate beyond merely paying c reditors.
    Best wishes
    Bob Brenna Jr
    Brenna Brenna & Boyce PLLC
    Rochester, New York

    Bob, Robert L. Brenna, Jr. No relationship is intended, agreed upon or accepted by answering this general question Brenna Brenna and Boyce PLLC Rochester, New York brenna@brennalaw.com

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