How doI disperse money to creditors when there is not enough assets in the estate to cover the debts?
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How doI disperse money to creditors when there is not enough assets in the estate to cover the debts?
Do I give an even percentage to each creditor?
Asked on September 7, 2011 under Estate Planning, New York
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If the estate is being probated and certain creditor claims have been approved by you but there is not enough assets in the estate to pay the creditors, the executor and any probate attorney handling the estate, you need to file a petition with the superior court where the probate is filed seeking an order from the court as to how the assets from the estate are to be distributed.
The court will review the petition and make an award where in all likelihood the crediotrs whose claims that have been accepted for payment by the executor will receive a diminished percentage of what was requested as payment in full.
It is very important to obtain such an order from the probate court for the allowed distribution of assets to protect the executor from liability claims later on by any creditor.
Good question.
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