Transfer of the right of claim to the heirs and the specifics of the procedure
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A business owner was pursuing a debt collection lawsuit and then passed away. What happens to the lawsuit and the debt?
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Did you know that the right to claim a debt is inherited—and how can heirs continue to collect?
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What should heirs do in the first months after the death of the creditor to avoid losing their right to receive the debt?
The director of a small company personally lent his partner 45,000 euros. The relationship was long-standing, formalized by a simple loan agreement. The director died. The partner assumed the debt “died with him.” The director’s heirs were at a loss.
The debt didn’t die. The right to claim it passed to the heirs. But they needed to act correctly and promptly.
The principle of universal succession
According to the Civil Law of Latvia, inheritance is the transfer of all property of the deceased (the testator) to their heirs. This means the transfer of not only assets but also liabilities—and in both directions.
The right to claim a debt is a property right. It is part of the inheritance and passes to the heirs by inheritance. The death of the creditor does not terminate the debtor’s obligation.
Who inherits the right of claim?
Inheritance by law: If the deceased left no will, relatives inherit in order of priority. First in line are the spouse and children. If none are present, then the parents. Then come the siblings, and so on.
Inheritance by will: if there was a will, the right of claim passes to the persons specified in it.
Acceptance of inheritance: The heir must accept the inheritance by submitting an application to a notary. The deadline for accepting an inheritance in Latvia is one year from the opening of the inheritance (i.e., from the date of death).
What happens to a lawsuit that has already begun?
If legal proceedings were already ongoing at the time of the creditor’s death, they are not automatically terminated. The proceedings are suspended until the heir assumes his or her inheritance rights. Once the heir has accepted the inheritance, they become the legal successor, and the proceedings resume where they left off.
In arbitration court: succession is formalized by an application for a replacement of a party in the process with the attachment of documents confirming the acceptance of the inheritance (a certificate of inheritance from a notary).
What the heirs need to do
The first step—within one year of the death—is to contact a notary to open an estate case and accept the inheritance. Determine the composition of the estate, including accounts receivable (debts owed by third parties to the deceased).
The second step is to obtain a certificate of inheritance from a notary. This will list the inherited assets, including any claims.
Step three: If there are any pending legal cases, notify the court of the succession and submit a certificate of inheritance. The court will issue a ruling on the replacement of the party.
Step four: If there were no court cases but debts exist, assess them and, if necessary, begin collection. The statute of limitations continues to run.
Special case: the debtor died
If the debtor dies, their obligations also pass to their heirs. If the heirs accept the inheritance, they also accept the debts. If the inheritance exceeds the debts, the heirs receive the difference. If the debts exceed the assets, the heir has the right to renounce the inheritance.
The creditor of the deceased debtor must present claims to the heirs in the prescribed manner or declare them during the inheritance process.
What needs to be done right now
First: if you conduct business based on personal loans or contracts with individuals, ensure the documents are properly executed and the rights of claim are clearly stated. Vague verbal agreements are difficult to pass on to heirs.
Second, make a list of the company’s assets, including accounts receivable—this will help the heirs quickly understand the situation.
The death of a creditor is a tragedy. But it is not debt forgiveness.
This article is for informational purposes only and does not constitute legal advice.