Creditors Claims Must be Timely Filed
A person or entity that has a financial claim against a decedent must file a creditor claim with the Clerk of Court in the County where the probate is filed. A creditor may even petition to open the probate estate process if none was started by another person. The creditor claim must be filed and served within four months after the second publication of notice to creditors in a legal newspaper in the county of decedent's residence, or within thirty days after the personal representative mails actual notice to the creditor.
When the probate is opened by the personal representative, the Fiduciary files a notice to creditors and causes that notice to be published in a legal newspaper in the decedent's county of residence once per week for two consecutive weeks. The personal representative should also give actual notice to known creditors by serving upon the creditor or mailing to the creditor's last known address a copy of the notice to creditors. The personal representative is also required to mail/give a copy of the notice to creditors to the Department of Social and Health Services. A personal representative must file proof with the court of giving notice to creditors and publishing that notice.
The personal representative must conduct a thorough search of the decedent's papers and financial statements in searching for creditors. When the personal representative has completed this search, she is presumed to have done her duty regarding creditors, and she may file with the court an affidavit concerning reasonably ascertainable creditors. This affidavit and the reasonably diligent search that underlies it may affect the status of undiscovered creditors which are subsequently discovered.
The personal representative has a duty to allow or reject all claims properly presented. The personal representative has a right to compromise claims in the best interests of the estate. Claimant of a rejected claim has twenty days in which to request a gearing or bring suit on the rejected claim.
If the personal representative has a creditor claim of his own, that claim must be presented to the court for approval, regardless whether nonintervention powers have been granted to the personal representative.
Priority to Paying Creditors and Claimants
Iowa and Illinois law each have a required priority in which claims can be paid. This is significant if the estate is too small to pay everyone. The priority of payment varies from state to state. In Iowa the cost of administration is top priority, funeral and last illness, taxes and medicaid, then general creditors or claimants