As the estate executor, is it ill-advised to try to obtain credit report on decedent? I am unsure if the ramifications of doing this are good or may result in potential legal issues? The estate is currently in probate. I presume that the credit reporting agencies will provide a report upon proof of being appointed.

  • 3
    What do you hope gain or learn by having a credit report on the decedent? Aug 10 '20 at 22:50
  • Might a credit report show debts owed to the decedent? I doubt it will., but if it does-- this is what I hope to gain. I have no idea how else I might find out what others may have owed the decedent. The creditors are known in so far as bank statements and other statements have revealed. But I worry it may reveal habits or debts that I'd really prefer not to know about from a personal perspective (i.e. letting dead dogs lie). I hope that makes sense.
    – peinal
    Aug 11 '20 at 2:04
  • 1
    Credit reports show obligations (debts, mortgages, revolving credit, etc.) owed by the subject of the report. I've never seen one (here in the US, might be different elsewhere) that showed obligations owed to the subject. Aug 11 '20 at 16:53
  • @DavidSupportsMonica-- that was my suspicion. How to find debtors?
    – peinal
    Aug 11 '20 at 19:07
  • Review the decedent's documents and files. Ask the decedent's relatives and friends. Aug 11 '20 at 19:39

As executor, you have a duty to settle the debts of the decedent. A credit report could reveal unknown debts. The typical death-notice publishing may also reveal debts, but I'm not persuaded that all creditors are actually notified. From the legal perspective, they have been "notified" when you publish the announcement, so some debts might have to be written off by the creditor, if they don't subscribe to the local paper. The law does not require you to do the least you possibly can in settling those debts, and does not require you to maximize the benefits to the those who inherit part of the estate. You can go from this to a personal decision about whether it is ill-advised.

  • That was not evident from the original question.
    – user6726
    Aug 11 '20 at 20:29
  • True enough, and I see now that your answer predated the comments that revealed it. I'll delete my comment. Aug 11 '20 at 22:20

I presume that the credit reporting agencies will provide a report upon proof of being appointed.

Generally, they will.

As the estate executor, is it ill-advised to try to obtain credit report on decedent? I am unsure if the ramifications of doing this are good or may result in potential legal issues? The estate is currently in probate.

Generally speaking, notice to creditors by publication is effective to bar the claims of creditors who are unknown to the executor, but not to those who are known to the executor, who are only barred when given a notice of the deadline for filing claims in an individualized letter giving the creditor actual notice of the deadline. So, obtaining a credit report expands the number of creditors who must be given an individualized notice and greatly increases the likelihood that creditors who are given a notice that wouldn't otherwise be given a notice will file a claim against the estate.

But, the duty to give an individualized notice to known creditors in order for them to be barred, only applies to creditors who are known to the executor before the creditors are barred by publication of a notice to creditors setting for a deadline or a statute of limitations. If you only obtain a credit report for the decedent after unknown creditors are barred by publication or some other non-claim statute or statute of limitations, the downside of obtaining a credit report is avoided.

There are two reasons that you might want to obtain a credit report, and one of those reasons is a reason to attempt to obtain a credit report even before unknown creditors are time barred by a publication or other deadline.

Both reasons relate to debts that are secured by collateral, also known as secured debts.

The first is that a credit report may disclose a secured debt which has as its collateral an asset not otherwise known to the executor, such as a mortgage house or vehicle in another state, or a small business asset of which the executor was unaware.

The second is that while the death of a decedent usually bars unsecured creditors from taking legal action to collect their debts outside of filing claims in the probate process, the death of a decedent usually not bar bar secured creditors from enforcing their debts against collateral owned by the decedent. Indeed, it is common for secured debts to define the death of the secured debtor as an event of default which can be used to authorize the foreclosure of the collateral to pay the debt even though payments on the secured debt are current.

On the other hand, if secured debts are kept current on their payments, often a secured creditor will never even think to determine if the secured debtor has died and will not declare the debt to be in default or attempt to foreclose on it, while if payments are missed, the secured creditor is very likely to learn this fact and to attempt to foreclose on the debt as soon as possible, rather than forbearing until the collateral is sold commercially to pay their debt.

While the proceeds of a foreclosure of collateral for a secured debt are applied towards payment in whole or in part of the debt, the amount of credit that the secured debtor receives against the debt owed to the secured creditor is almost always much, much less than the value that the secured debt could have received for the collateral if it was sold instead in an ordinary commercial manner. Indeed, it is very hard to obtain fair market value of real estate that is being foreclosed upon even in an ordinary commercial sale conducted before the foreclosure date, because potential buyers usually low ball their offers to purchase the property knowing that the seller is under economic duress.

For example, suppose that the decedent owned a vacation house with a fair market value of $300,000 subject to a $200,000 mortgage. If it is foreclosed upon, the mortgage would probably be extinguished, but there would be little or nothing left over for the estate. In contrast, if the vacation house were sold through a realtor by the executor, the estate would probably be able to net $80,000 or more for the estate after paying off the mortgage and paying for the costs of sale and a realtor's commission.

Obtaining a credit report that alerted the executor to the existence of the vacation house and the mortgage on the vacation house could add a great deal of value to the estate as a result.

There are other ways to learn about secured debts, especially those which are paid on a regular monthly basis, such as reviewing the decedent's bank records and reviewing the decedent's tax returns. But a credit report can sometimes reveal other assets and secured debts.

Another way that a credit report can reveal missing assets is by showing histories of payments of unsecured or secured debts that don't match up to any of the bank records available to the executor. This is a clue that there are additional financial accounts in the estate of which the executor is unaware. Then, the executor can contact one or more of the unsecured creditors who was being paid from the unknown account and use that information to locate the unknown account.

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