What happens if estate debts exceed the assets?

Asked almost 2 years ago - 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. James P. Frederick

    Contributor Level 20

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    Answered . 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... more
  2. Robert L. Brenna Jr.

    Contributor Level 12

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    Answered . 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... more
  3. Eric Jerome Gold

    Pro

    Contributor Level 19

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    Answered . 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... more

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