Can the Administrator (Probate) of an estate bankrupt what is owed by them to the other sole heir?

My husbands mom died. He agreed for his sister to act as administ. of the estate valued at $200,000. The mom loaned sister $150,000 prior to death that was secured with 1st & 2nd trust of deeds on the sisters home. Courts final judgement found the sister owed my husband $50,000. A promissary note was made for monthly pymts to be pd until debt was paid in full. Sister then sold her home for $130,000 cash and refused to pay my husband the $50,000. Instead, promised to continue pymt plan. Pymts stopped and sister filed for bankruptcy dismissing the debt.Is this legal????

Asked on June 16, 2009 under Bankruptcy Law, California

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

While not moral it is unfortunately legal.  Your husband was an unsecured creditor.  That is, he owned the note but it was not secured by any specific property; for example, a mortgage on real estate.  As such her obligation to him may have been completley discharged in bankruptcy.

If she filed a Chapter 7 the entire debt would have been discharged; in a Chaperter 13 not so.  Chapter 13 enables individuals with regular income to develop a plan to repay all or part of their debts.  Under this chapter, debtors propose a repayment plan to make installments to creditors over 3 to 5 years.

Find out which chapter she filed under.  It makes a difference.  Also, no matter which chapter that she did file under, as a creditor you should have received notice of the creditor's meeting; if you did not your debt may not have been validly discharged.  You should really consult with an attorney in your area about this.   


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