The Estate Can Push Back
Creditor claims are not a one-way street. Sometimes the person who passed away was owed money by the very creditor now filing a claim. For example, a contractor may not have finished a job. Or a business partner may have owed a debt.
In allowing a claim the personal representative may deduct any counterclaim which the estate has against the claimant. In determining a claim against an estate a court shall reduce the amount allowed by the amount of any counterclaims and, if the counterclaims exceed the claim, render a judgment against the claimant in the amount of the excess.
A.R.S. § 14-3811The personal representative reviews the claim and deducts any valid counterclaim. If the court is involved, it does the same calculation. When the counterclaim is larger, the court enters a judgment against the creditor.
Broad Flexibility in Counterclaims
The law takes a broad approach to what qualifies as a counterclaim. It does not need to arise from the same transaction as the original claim.
For example, a creditor may file a claim based on an unpaid invoice. That creditor could face a counterclaim from a separate deal. The statute also allows counterclaims that seek relief beyond the original claim amount.
This gives personal representatives meaningful leverage. As a result, creditors who also owed the estate may receive less. They may even owe money back to the estate.