Handling SBA and Other Creditor Claims in North Carolina Probate

Detailed Answer

When you serve as a personal representative in a North Carolina estate, you carry a duty to protect estate assets, notify creditors of the probate, review claims, and pay valid debts. This process ensures fair treatment of the decedent’s creditors—whether private lenders, medical providers, or the Small Business Administration (SBA)—and helps you close the estate without future liability.

1. Identify and Notify Known Creditors

Begin by gathering all information about potential creditors. Check the decedent’s files for bills, loan agreements, credit cards, and tax notices. Under N.C.G.S. § 28A-19-2, you must mail written notice to each known creditor within three months of qualifying as personal representative.

2. Publish Notice to Creditors

State law requires you to publish a “Notice to Creditors” once a week for three successive weeks in a newspaper of general circulation in the county where the decedent lived. See N.C.G.S. § 28A-19-1. Publication alerts unknown creditors and starts the statutory claim period.

3. Track the Claims Deadline

Creditors then have 90 days from the date of first publication to file written claims against the estate. That deadline is set by N.C.G.S. § 28A-19-3. Claims filed late are barred unless you agreed in writing to accept them.

4. Review and Approve or Deny Claims

As claims arrive, verify each against estate assets and records. For SBA loans, request account statements and payoff quotes. For medical bills or trade creditors, demand itemized statements. If a claim is valid and in the proper form, you approve it. If you dispute a claim, send a formal disallowance letter. Maintain detailed records of all correspondence.

5. Pay Valid Claims in Priority Order

Use estate funds to pay approved debts according to the priority rules in N.C.G.S. § 28A-13-3. Generally, you pay costs of administration first, then funeral expenses, taxes, family allowances, secured debts, and finally unsecured claims such as credit cards and the SBA.

6. Final Accounting and Estate Distribution

After settling creditor claims and taxes, prepare a final accounting for the court. Once the court approves, distribute any remaining assets to the heirs or beneficiaries. Receiving court approval releases you from personal liability for further claims.

Key Steps Checklist

• Collect creditor information from the decedent’s records.
• Mail notice to known creditors within three months (N.C.G.S. § 28A-19-2).
• Publish Notice to Creditors for three weeks (N.C.G.S. § 28A-19-1).
• Monitor the 90-day claim period from first publication (N.C.G.S. § 28A-19-3).
• Review, approve, or disallow each claim in writing.
• Pay approved claims in the order set by law (N.C.G.S. § 28A-13-3).
• Prepare and file a final accounting with the court.
• Obtain court approval before distributing assets to heirs or beneficiaries.

Conclusion & Next Steps

Handling creditor claims—especially SBA debts—requires close attention to deadlines, careful recordkeeping, and strict compliance with North Carolina law. If you need guidance or have questions about managing an estate, our team at Pierce Law Group can help. Contact our probate administration attorneys today by emailing intake@piercelaw.com or calling (919) 341-7055. Let us walk you through each step and ensure you fulfill your duties as personal representative.