Q: Post death, if secured asset is returned but FMV is below debt, does it get paid off before unsecured credit card debt?
In estate after a death, do secured assets that go to auction but fail to raise funds to pay off balance get paid off before unsecured debt or should they be treated equally? Credit cards are clamoring for money, but so is company that financed deceased loved ones camp trailer for delta between auction plus their expenses. There's not nearly enough to cover all the debts, so the estate is essentially insolvent. As executor and representative, is our word (interpreting "compromise claim" that a credit card maybe gets a smaller amount or nothing compared to unsecured debt final?
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A: That delta is referred to as a “deficiency” and it is an unsecured debt with the same priority as other unsecured debts such as credit cards.
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