Short Answer

In North Carolina, the personal representative must publish a notice to creditors, send personal notices to known or reasonably ascertainable creditors, wait for the claims period to expire, and then pay allowed claims in the statutory order before making any distributions. Medical bills (including those in collections) must be timely presented in writing and are generally paid as seventh‑class claims, while certain Medicaid recovery claims fall higher in priority.

Understanding the Problem

You are opening a North Carolina probate for your sibling’s estate and want to sell assets to pay debts before distributing the rest. Can you safely address medical bills in collections (and any other creditor claims) before you distribute funds, and what steps must you follow to do it correctly?

Apply the Law

North Carolina requires a personal representative (executor or administrator) to give creditors formal notice, receive and evaluate written claims, and pay them by statutory priority before distributing assets. The Clerk of Superior Court oversees the estate file. A published notice starts a minimum three‑month claims window, and personal notices to known creditors must be sent within 75 days after letters are issued. Medical service claims from the last year of life are seventh‑class; a Medicaid estate recovery claim is a sixth‑class claim. Disputed claims can be rejected in writing; a creditor then has a short period to sue.

Key Requirements

• Open the estate and get letters: Qualify as personal representative with the Clerk of Superior Court where the decedent was domiciled.
• Give creditor notice: Publish once a week for four consecutive weeks and send personal notice to known or reasonably ascertainable creditors within 75 days.
• Wait for the claims period: Claims must be presented by the deadline in the notice (at least three months after first publication); known creditors get at least 90 days from mailing if that date is later.
• Claims must be in writing: Creditors, including collection agencies for medical bills, must file written claims with the PR or the clerk.
• Pay in statutory order: After costs of administration and allowances, pay by class; medical services within 12 months of death are seventh‑class; Medicaid recovery is sixth‑class.
• Dispute or reject improper claims: If you reject a claim in writing, the creditor must sue promptly or be barred.
• No distributions until claims are resolved: Do not distribute estate assets until after the claims window closes and you have paid allowed claims in order.

What the Statutes Say

• North Carolina Gen. Stat. § 28A-14-1 (Notice to creditors) – Publish notice and send personal notice within 75 days of qualification.
• North Carolina Gen. Stat. § 28A-19-1 (How to present a claim) – Written claims with amount, basis, and claimant info; how to deliver.
• North Carolina Gen. Stat. § 28A-19-3 (Nonclaim statute) – Time limits that forever bar untimely claims.
• North Carolina Gen. Stat. § 28A-19-6 (Order of payment) – Priority classes for paying claims, including Medicaid and medical services.

Analysis

Apply the Rule to the Facts: Because the estate may owe medical bills in collections, you must publish a creditor notice and send personal notices to any known collection agencies and medical providers. After the claims window closes, pay allowed claims by class: if Medicaid benefits were provided, a DHHS recovery claim is sixth‑class; other medical services within the last 12 months are seventh‑class. To create cash for claims, you can sell vehicles and, if needed, the estate’s fractional real property interest through proper procedures before any distribution.

Process & Timing

1. Who files: The proposed executor/administrator. Where: Clerk of Superior Court in the decedent’s North Carolina county of domicile. What: Application for Probate and Letters; then publish a Notice to Creditors and later file the Affidavit of Notice to Creditors (AOC‑E‑307) with the initial inventory. When: Publish once a week for four weeks after you receive letters; send personal notices to known creditors within 75 days of qualification, setting a claims deadline at least three months after first publication.
2. Gather claims as they arrive, confirm amounts and dates of service, and classify by statute (e.g., Medicaid recovery vs. other medical services). If a claim is defective, late, or wrong, send a written rejection; the creditor must act promptly to preserve it.
3. After the bar date passes and disputes are resolved, liquidate assets as needed and pay allowed claims in priority order. Then distribute the remainder and file your final account.

Exceptions & Pitfalls

• If the decedent received Medicaid, you must send notice to the Division of Health Benefits; Medicaid estate recovery is a higher‑priority (sixth‑class) claim.
• Do not pay claims before the claims window closes unless you are certain the estate is solvent; premature payment can create personal liability or force pro‑rata adjustments.
• Medical bills older than 12 months before death may drop to a lower class and share pro‑rata with other general claims.
• No preference within a class—pay creditors of the same class pro‑rata; keep detailed records.
• If you reject a claim, the creditor has a short window to sue; track that deadline to close the file confidently.
• Wrongful death proceeds are generally not available to pay the decedent’s debts, except limited reimbursement for certain medical and burial expenses by statute.

Talk to a Probate Attorney

If you’re facing medical bills in collections and need to pay claims before distributing an estate, our firm has experienced attorneys who can help you understand your options and timelines. Call us today.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.