Q: Is it common for a creditor to repossess an item and then additionally withdraw all of the funds from the estate?
My grandpa from Texas passed a year ago. I am the sole beneficiary, but my great aunt was listed as the executor. I am in California and she is in Michigan. I wanted to put myself as executor. A friend of my grandpa’s in Texas misunderstood this and put herself as executor.
My grandpa had about $15,000 in his bank and an RV which supposedly he had not paid off. According to the friend who had made herself executor a creditor repossessed the RV and also took the money from the bank to “pay the deficit on the motor home loan.”
I have two questions from this but please fill me in if there’s anything more I should be on the lookout for:
1. Is it common for a creditor to repossess an item and then additionally withdraw all of the funds from the deceased bank account? Wouldn’t the repossessed item typically cover the remaining payments owed?
2. What type of paperwork should I request to see just to make sure that everything is legitimate as it has been explained to me?
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A:
When an item of tangible personal property (such as an RV) that secures a loan is repossessed because the loan is in default, the lender typically auctions the repossessed item and applies the proceeds to the balance due on the loan. Typically the proceeds are not sufficient to pay the balance due, leaving a deficiency.
When the borrower is deceased, that deficiency is a claim against the estate. The lender does not "withdraw funds from the estate". The lender does not have that power. But the lender does have the power to make a claim for the deficiency, and if that claim is made in a timely and correct manner, that claim will be paid if there are estate assets available to pay the claim. That is probably what happened in the case you are describing.
Probate files are public records. You can walk into the probate court and ask to review the file. Or you can ask the executor to provide copies of documentation to you. Start by asking for a copy of the creditor's claim filed by the lender.
Janice Jacovino agrees with this answer
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