How to Find a Deceased Persons Debts

David opened an email from a collection agency three months after his mother’s funeral—and realized the estate’s bank account was already frozen with a levy—and he was facing penalties for refusing to comply with the creditor’s demands. This is a surprisingly common scenario. Many people assume a death automatically stops creditors, but that’s simply not true. As an Estate Planning Attorney and CPA with over 35 years of experience, I’ve seen firsthand the distress caused when families are blindsided by debts they didn’t know existed. The good news is there are systematic ways to identify and address these liabilities, protecting your family and ensuring a smooth estate administration. My CPA background is particularly helpful here, because understanding the nuances of step-up in basis, capital gains implications, and accurate asset valuation can drastically affect how debts are handled.

What Happens to Debts After Someone Dies?

When someone passes away, their debts don’t disappear. They become a claim against the estate, not the individual heirs. The executor or administrator is legally responsible for identifying, validating, and ultimately paying legitimate debts. Ignoring these claims can lead to significant legal trouble, including personal liability and even liens on inherited assets. It’s crucial to understand the process from the outset and not assume that the estate is automatically shielded from creditors.

How Do You Uncover Hidden Debts?

Locating all of a deceased person’s debts requires a thorough investigation. Start with the obvious: bank statements, credit reports, and bills found in the home. However, many debts are not readily apparent. Look for these common sources:

• Credit Reports: Obtain a copy of the deceased’s credit report from all three major credit bureaus (Experian, Equifax, and TransUnion). These reports will reveal credit cards, loans, and other outstanding obligations.
• Bank Records: Review all bank statements for recurring payments, automatic withdrawals, and loan activity.
• Tax Returns: Examine several years of tax returns for cancelled checks, installment payments, and indications of loans or lines of credit.
• Property Records: Check county records for mortgages, property tax liens, and other encumbrances.
• Online Accounts: If possible, access online banking, credit card, and loan accounts to review transaction history.

Don’t overlook less obvious sources, like medical bills (often a substantial source of debt), business debts (if the deceased owned a business), and potentially even judgments or settlements from lawsuits.

What About Creditor Claims and Probate?

In California, probate creditor claims follow the formal claims system as outlined in Probate Code §§ 9000–9399. Creditors must file a formal claim with the probate court within a specific timeframe. The executor has a duty to review these claims and either approve or deny them. If a claim is deemed invalid, it can be challenged in court. The court determines the validity and priority of these claims.

What is the Order of Debt Priority in California?

California’s mandatory payment order dictates which debts get paid first. Probate Code § 11420 outlines the specific hierarchy. Generally, secured debts (like mortgages) take priority over unsecured debts (like credit cards). Expenses of administration (executor fees, attorney fees, court costs) are paid first, followed by taxes, secured debts, and then unsecured debts. Spousal and child support obligations are often given high priority.

What is the Time Limit for Creditors to File a Claim?

Creditors in California have a hard one-year deadline to initiate a lawsuit against the estate, regardless of whether a formal claim was filed with the probate court, as specified in CCP § 366.2. This one-year statute of limitations is NOT tolled by the probate process itself, meaning the clock continues to run even while the estate is being administered. Missing this deadline can shield the estate from the debt.

What if the Estate Doesn’t Have Enough Assets to Cover All Debts?

If the estate’s assets are insufficient to satisfy all debts, the debts are paid in the order of priority. Unsecured creditors may receive only a partial payment or nothing at all. It’s important to understand that heirs are generally not personally liable for the debts of the estate, except in limited circumstances. However, this is where my CPA expertise becomes critical. An accurate valuation of assets, particularly those with a step-up in basis, can minimize capital gains taxes and maximize the net estate available for debt repayment.

What About Spousal Liability?

The exposure of a surviving spouse to the debts of the deceased is a frequent concern. In California, community property assets are generally subject to the debts of either spouse, as defined in Family Code § 910. However, a surviving spouse’s separate property is generally protected. Probate Code §§ 13550–13554 also provides a capped statutory liability framework for certain debts of the deceased. Careful analysis of the asset characterization is essential.

What If the Estate is Small?

For estates with a limited value, California offers simplified probate procedures. Currently, the threshold for a small estate is Probate Code § 13100 = $208,850 for deaths on/after April 1, 2025. If the estate falls below this amount, a more streamlined process may be available, potentially avoiding the formal claims process. However, even small estates are subject to creditor claims, and it’s crucial to follow the proper procedures.

What makes a California will legally enforceable when it matters most?

In California, a last will and testament operates within a probate system that emphasizes intent, clarity, and procedural compliance. When properly drafted, a will does more than distribute property—it creates legally enforceable instructions that guide courts, fiduciaries, and beneficiaries through administration with fewer disputes and less uncertainty.

• Clarity: Avoid vague terms that trigger probate disputes.
• Health: verify mental state at signing.
• Errors: check for missing amendments often.

When a will is drafted with California probate review in mind, it becomes a stabilizing roadmap rather than a source of conflict. Clear intent, proper authority, and compliant execution protect both families and estates.

Controlling California Statutes on Estate Debts and Creditor Claims

• Debt Priority:
  
  California Probate Code § 11420
  
  Establishes the mandatory statutory order in which estate debts must be paid before any distributions to beneficiaries.
• Probate Creditor Claims:
  
  California Probate Code §§ 9000–9399
  
  Governs how creditor claims must be formally filed in probate and why informal demands, letters, or invoices are legally ineffective.
• Creditor Lawsuit Deadline:
  
  California Code of Civil Procedure § 366.2
  
  Imposes a strict one-year deadline from the date of death for most creditor lawsuits, which is not tolled by probate proceedings.
• Surviving Spouse Liability:
  
  California Probate Code §§ 13550–13554
  
  Limits a surviving spouse’s personal liability for a decedent’s debts to the value of property received under these statutes.
• Small Estate Threshold:
  
  California Probate Code § 13100
  
  Sets the $208,850 small estate affidavit threshold for deaths occurring on or after April 1, 2025.