Collateral Recovery with Compassion: A Probate Perspective
Welcome to the recap of our 11th episode of the #CoffeeWithCasey webinar discussing collateral recovery in a probate context.
Shareholder, Real Estate Default Group Chair, and Chicago Office Managing Attorney Casey Hicks sat down with Probate Group Attorney Matt Pomy. While Casey enjoyed a cup of caramel cold brew—in an iced mug—Matt stuck with his Diet Coke. He did drink it from a mug, however, to stay in the spirit of things!
Key topics in this webinar include:
- Recovering collateral post-death when the estate/heir retains possession
- A practical guide for creditors
- What happens to collateral when a borrower dies?
- Why probate changes the game
- The unique challenge: third parties in possession
Before any discussion around specifics, Matt reminded us about putting the human element first. We’re all dealing with death, which involves emotions. He wisely recommended starting with empathy first. It’s a sensitive matter all around.
To hear his suggestions on setting the right tone and why it’s essential to do so, check out the webinar here.
What are some of the most common probate scenarios?
There are some common scenarios that occur in probate. The most common is a vehicle driven by heirs. There are multiple questions that need to be answered from the creditor perspective. For example, you’ll want to obtain proof of insurance. Communication is key.
The second common scenario involves business equipment that’s held onto by family. This happens in farming businesses, for instance. The webinar also walks through two additional scenarios creditors may encounter. Regardless of circumstance, early and clear communication can make all the difference. Matt offers some great suggestions on how to do this with various personal property items.
Probate or no probate? The first step matters
Following some basic steps will help ensure you have the information you need to build a picture of the person’s financial situation at the time of death. When there is a probate, filing a timely claim makes the process more efficient.
Every state has its own deadlines (and can even vary within a state).
The more property that person owns, the more complicated the probate process may be. For instance, if there are homes in two different states, there are two different probationary deadlines you want to adhere to. Knowing where property is located becomes more important with larger estates.
Matt answers some detailed questions about storage charges. If you have a situation where personal property items are being stored (e.g., boats), you’ll definitely want to watch the webinar here.
If there’s no estate, it limits options for creditors but also streamlines the process a bit. This is when you may pursue repossession options, consider loan assumption or petition to open an estate.
Working through the probate estate
Matt walked through the various ways you may work through the probate estate. He gives specifics on filing a secured claim and filing a contingent/unliquidated claim. Administrative claims, secured claims, and unsecured claims are generally paid in that order. He also walks you through communicating with the executor, seeking court orders if needed, and removing fiduciaries.
When the estate is not cooperative
When you have a cooperative estate, it can all be cut and dry. When families start to assume loans or refinance properties, you’ll want to ensure you are communicating through formal agreements and doing your due diligence. Our goal is to minimize time in probate because it’s in the best interest of the creditors. Creditors do have options, and Matt talks through several of them.
No estate? No problem (maybe)
You may take replevin actions. If you do, you’ll want to know your state’s rules and limits.
If you need to force an estate open, it’s a complicated process with specific deadlines. Whether or not a creditor can file for probate vs an attorney varies by state.
Special case: real estate occupants
When occupancy by heirs happens, complications can pile up. This is especially true when heirs may not be able to fulfill the financial obligations.
Important state considerations
If you’re in Ohio, Pennsylvania, Florida, Illinois, Indiana, New Jersey, Kentucky, or Michigan, you’ll want to watch the webinar. Matt breaks down through important state-specific considerations in an easy-to-understand manner.
If you’re thinking about referring a claim to Weltman, Matt walks you through the process, so you’ll know what to expect. Collateral rights are not extinguished when the consumer passes away. And while probate requires you to jump through some hoops, they’re just added steps and not roadblocks. Keep in mind that Weltman is here to help you recover as efficiently as possible.
Our team is constantly monitoring these topics in the industry. If you have any questions about this process or want to learn more about Weltman’s real estate default, collateral recovery, and/or probate recovery solutions, please connect with Casey and Matt at any time.
These blogs are not a solicitation for business and are not intended to constitute legal advice on specific matters, create an attorney-client relationship, or be legally binding in any way.
