Easy 7-Step Guide to Paying Off Creditors of an Estate in Georgia

Shawn Breyer
July 13, 2024

Paying off creditors of an estate during probate in Georgia can get complicated.

You have to figure out:

who the creditors are and how much to pay them
how to notify the creditors
what to do if there are more debts than money
how to prioritize debts
what property is exempt from creditors
how long creditors have to claim the debts

Keep scrolling to learn more.

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Fill out the form to have us fill out your petition for you (at no charge). We can only offer 5 free petitions per week, so act fast to secure your spot and avoid the hassle of probate.

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Understanding The Probate Process In Georgia

Probate is administering a deceased person’s estate by:

paying off creditors of the estate
distributing the remaining assets to beneficiaries

Probate can be straightforward or complex.

It depends on the size of the estate and the presence of a will.

How To Start Probate

Let’s talk about how to probate an estate in Georgia.

File the Petition for Probate in the county where the deceased person lived.

The judge will give you:

Letters Testamentary (if there was a will)
Letters of Administration (if there was NOT a will)

These give you the ability to manage the estate’s assets and liabilities.

To start the probate process:

Secure Death Certificates: Obtain multiple certified copies.
Find the Will: Locate the original will, if available.
File Probate Petition: Submit the petition, death certificate, and will (if applicable) to the local probate court.
Obtain Letters Testamentary: Receive court approval to manage the estate with Letters Testamentary.

Notifying Creditors Of The Estate In Georgia

One of the executor’s first duties is to notify all known creditors of the estate.

Notifying creditors is crucial for:

legal compliance
fair debt settlement
protecting executors from liability

Notifying the creditors:

ensures transparency
finalizes the estate
prevents legal disputes

This helps make sure you have an orderly probate process.

How To Notify Creditors

Here is how the executor needs to notify creditors:

Review Financial Documents: Examine bank statements, loan documents, and credit card statements to identify all creditors.
Contact Creditors: Send formal letters to all identified creditors, informing them of the probate process and claim submission procedures.
Publish Notice: Place a notice in a local newspaper, ensuring it runs for four consecutive weeks.

Consequences Of Not Notifying Creditors Properly

This is where having a probate lawyer helping you is important.

Here are the consequences if you mess up notifications to creditors:

Unbarred Creditor Claims: Creditors can file late claims, delaying and increasing costs.
Executor Liability: Executors may be personally liable for financial losses or legal costs.
Legal Actions: Creditors can sue, leading to court orders and penalties.
Extended Probate: Disputes and litigation can prolong the process.
Increased Legal Fees: Higher legal costs deplete the estate’s assets.
Beneficiary Disputes: Reduced assets can cause conflicts among heirs.
Disrupted Distribution: Planned estate distribution can be compromised.
Court Supervision: Increased court oversight adds complexity and control.

How To Prioritize Creditors And Types Of Debt

Not all debts are treated equally during probate.

Georgia law tells us the order in which you should be paying off creditors, which are:

Administrative Expenses: Costs associated with administering the estate, such as attorney fees and court costs, are paid first.
Funeral Expenses: Reasonable funeral and burial costs come next.
Taxes: Federal taxes owed by the decedent take precedence over other debts.
Medical Expenses: Medical bills incurred in the last illness of the decedent are given priority.
Secured Debts: Mortgages and other secured loans must be paid, as these debts are tied to specific property.
Unsecured Debts: Credit card debts, personal loans, and other unsecured obligations are paid after secured debts.

This prioritization exists to:

protect the rights of certain creditors
maintain an orderly and fair process in settling the decedent’s obligations

As the estate administrator, make sure that you:

Follow Priority Order: Start with administrative expenses and proceed sequentially.
Pay in Full: Settle each debt category completely before moving to the next.
Keep Creditors Informed: Communicate the process and claim priorities to manage expectations and reduce conflicts.

When There’s Not Enough Money For Paying Off Creditors

Sometimes, an estate may not have enough assets to cover all debts.

In such cases, the estate is considered insolvent.

The executor must follow specific steps to handle the situation.

Liquidate Assets: Sell estate assets to generate funds for paying creditors.
Pay Debts by Priority: Use available funds to pay debts in the priority order.
Pro Rata Payments: Distribute remaining funds proportionally among lower-priority creditors after higher-priority debts are paid.
Notify Creditors: Inform creditors if the estate is insolvent and unable to fully satisfy their claims.

Steps You Should Take

Evaluate Estate Assets: Assess all the estate’s assets, including real estate, personal property, bank accounts, and investments.
Sell Non-Essential Assets: Sell assets that are not exempt or necessary for the beneficiaries. Make sure you get fair market value.
Distribute Funds: After liquidating assets, distribute the funds according to the established priority.

Assets That Are Not Exempt Or Necessary

Non-Exempt Assets: Property that’s not legally protected from being used to pay off creditors. (i.e., extra properties, luxury items, investment accounts, etc.)
Non-Necessary Assets for Beneficiaries: These are items not essential for the basic living needs or support of the beneficiaries. (i.e., vacation homes, second cars, etc.)

Additional Considerations For Paying Off Creditors

Several other factors can influence how debts are handled when paying off creditors.

Executors should be aware of these to manage the estate effectively.

Contesting Creditor Claims

The executor has the right to contest any claims they believe are invalid or excessive.

This may involve negotiations with creditors or seeking a court ruling to resolve disputes.

Here are the steps to take:

Review Claims Carefully: Examine each creditor claim for accuracy and validity.
Communicate with Creditors: Reach out to creditors to negotiate or clarify any disputes.

Statute of Limitations

Creditors must file their claims within a specific timeframe.

In Georgia, creditors have ~3 months from the date of the notice publication to submit their claims.

Claims filed after this period may be barred.

Track Deadlines: Keep records of when notices were published and the deadlines for creditor claims.
Monitor Incoming Claims: Check for new claims and verify their timeliness.

Get Help With Probating An Estate In Georgia

Are you overwhelmed trying to figure out how to go about paying off creditors?

Our Georgia probate attorneys handle everything for you.

We specialize in taking as much as possible off your plate so that you are not:

personally financially liable
accidentally breaking the law
filling out the paperwork wrong
not notifying or paying off creditors
dealing with disputes among family and partners

Fill out the form to get a have us fill out your Petition for FREE.

Get Your Free Probate Petition

Probate can be confusing and stressful. Incorrectly filled-out probate petitions can cause delays, rejections, and added stress. We will fill out your petition for you (for FREE).

Fill out the form to have us fill out your petition for you (at no charge). We can only offer 5 free petitions per week, so act fast to secure your spot and avoid the hassle of probate.

"*" indicates required fields

What Areas We Serve For Probate

Our Georgia probate lawyers work remotely, so you don’t have to visit an office. Here are all the counties we serve in Georgia.