Detailed Answer
When a loved one passes away, the executor must review all creditor claims against the estate. Under Kentucky Revised Statutes (KRS) 395.020, you must allow claims that meet formal requirements and object to those you believe are invalid. If you suspect predatory lending—where an elderly decedent faced high-rate loans or unfair terms—you can challenge the claim in probate court.
1. Review Deadlines for Creditor Claims
KRS 395.020 requires creditors to file claims within six months of publication of the notice to creditors. If the claim arrived late, file an objection based on KRS 395.020 (statute).
2. File a Formal Objection
File a written objection with the probate court clerk. Specify why the loan is invalid—usurious or unconscionable—and cite relevant statutes. Sign and serve the objection on the creditor before the probate court sets a hearing date.
3. Gather Evidence of Predatory Terms
Collect the loan agreement, payment history, and any correspondence. Note if the interest rate exceeds Kentucky’s usury cap of 8% per annum under KRS 360.040 (statute). Document any hidden fees or misleading sales tactics that violate the Kentucky Consumer Protection Act (KRS 367.170, statute).
4. Assert Statutory Defenses
Argue that the debt is void or limited by usury law. Kentucky law prohibits charging interest above 8% without a written agreement under seal. You may also claim unconscionability if the terms shock the conscience of the court (see KRS 360.010).
5. Seek Court Relief
At the hearing, move to strike the claim or for summary judgment if the facts are undisputed. If the court denies relief, consider filing a separate action for consumer fraud in Circuit Court under the Consumer Protection Act. You can also offset the creditor’s claim with a counterclaim under KRS 395.270 (statute).
Disclaimer: This article is for informational purposes only. It does not constitute legal advice. Consult a qualified attorney for legal guidance.
Helpful Hints
- Document all communications with the creditor.
- Check the six-month deadline carefully and calendar filing dates.
- Compare the interest rate to Kentucky’s statutory cap.
- Look for hidden fees or balloon payments.
- Consider hiring a probate or consumer law attorney to assist.