When someone dies owing you money secured by real property, you face important choices about how to collect. You hold a lien on the property itself. But what if the property doesn’t sell for enough to cover the full debt plus all accrued interest, late fees, and attorney’s fees? Can you pursue the estate for the deficiency—the amount still owed after the property is sold?
The answer depends on how you classify your claim in the probate proceeding and whether you meet strict statutory deadlines. In dependent administrations, Texas law gives secured creditors two options. They can treat their claim as a “matured secured claim” and pursue both the secured property and the estate’s general assets for any deficiency. Alternatively, their claim can be treated as a “preferred debt and lien claim” which limits collection to the secured property alone.
Missing the ninety-day deadline to sue after your claim is rejected can cost you the right to collect any deficiency. Even if you successfully receive payment from property sales, you may lose thousands of dollars in additional amounts owed. The case of In re Estate of Jose F. Hernandez, No. 13-24-00506-CV, 2025 WL 2937485 (Tex. App.—Corpus Christi-Edinburg Oct. 16, 2025, no pet. h.), illustrates exactly what secured creditors stand to lose when they fail to timely pursue their claims in a dependent administration.
Facts & Procedural History
Hernandez died in 2022. He owed a substantial amount of money on three properties. The secured creditor had sold these properties to the decedent through owner financing. Each sale was documented by a promissory note secured by a vendor’s lien and deed of trust. When the decedent died, he had not paid off any of the three notes.
One of the decedent’s heirs filed an application to probate his will in 2022. Cole Eckhoff became the temporary administrator of the estate in 2023. This was a dependent administration where the personal representative must obtain court approval for major actions.
In 2023, the secured creditor filed a claim against the estate seeking the unpaid principal balances on all three notes plus accrued interest, late fees, attorney’s fees, and court costs. The administrator never responded to the claim within the required thirty days. Under the Texas Estates Code, this silence meant the claim was automatically rejected by operation of law in June of 2023.
This rejection triggered a ninety-day deadline for the secured creditor to file suit in the probate court. The secured creditor and administrator entered into an agreement extending this deadline to November 1, 2023. The secured creditor never filed suit by November 1, 2023.
The estate administration continued despite this missed deadline. After disputes arose about the amounts the secured creditor was claiming, he withdrew and nonsuited his entire claim in January 2024, stating he would “start over.” The county court later authorized the sale of all three properties. The secured creditor accepted payments totaling approximately $70,000 from these sales, and his liens were released so the properties could be sold with clear title.
On May 7, 2024—more than six months after his extended deadline had passed—the secured creditor filed what he called a “first amended claim.” This amended claim sought additional amounts beyond what he had received from the property sales. He argued the payments didn’t account for all accrued interest and late charges. He continued seeking substantial attorney’s fees. He amended his claim twice more.
After a hearing on his third amended claim in August 2024, the county court signed an order disallowing the remainder of his claim. The court found that the secured creditor’s claim was barred by his failure to file suit within ninety days of rejection. The secured creditor appealed, arguing the county court abused its discretion in dismissing his claims.
Matured Secured Claims vs. Preferred Debt and Lien Claims
For secured creditors, we have to start with the options that are available to them in the probate process.
The Texas Estates Code provides two distinct classifications for secured claims in probate proceedings. Understanding these classifications is important because they determine whether a creditor can pursue deficiency claims against the estate’s general assets.
A “matured secured claim” allows the secured creditor to collect not only from the secured property but also from the estate’s general assets if the property doesn’t fully satisfy the debt. The creditor can pursue a deficiency judgment against the estate for any amount remaining unpaid after the secured property is exhausted. This classification appears in the payment priority scheme as a Class 3 claim under Section 355.102 of the Texas Estates Code. This comes after funderal and last expenses for the decedent and then probate administration expenses, such as the probate attorney’s fees.
A “preferred debt and lien claim” limits the creditor to collecting only from the secured property itself. This comes before any other creditor or claim–excepting maybe the IRS for unpaid taxes. The creditor cannot pursue the estate’s general assets for any deficiency. If the property sells for less than the debt, the creditor absorbs the loss. The estate’s other assets remain protected from any claim for the shortfall.
The practical difference between these classifications can be substantial. Consider a situation where a decedent owes $100,000 secured by property worth only $70,000. If the claim is treated as a matured secured claim, the creditor can collect $70,000 from the property and then pursue the estate for the remaining $30,000 deficiency. If the claim is treated as a preferred debt and lien claim, the creditor can collect only the $70,000 from the property and has no right to the additional $30,000.
The Default Denial Rule & the 90-Day Deadline
Texas law provides a default rule for secured creditors. The personal representative must provide secured creditors with notice of the probate administration. This is what probate attorneys refer to as the mandatory creditor notices.
The creditor must then respond within the later of six months after letters are granted or four months after receiving the secured creditor notice. In their response, the creditor must specify whether the claim should be treated as a matured secured claim or a preferred debt and lien claim.
If the secured creditor fails to respond within the required timeframe or fails to clearly specify which classification they want, the claim is automatically treated as a “preferred debt and lien claim” by default. This default protects estates and beneficiaries by ensuring that secured creditors who want access to the estate’s general assets must affirmatively claim that right within specified deadlines.
This brings us to the 90-day suit rules. Dependent administrations operate under strict procedural requirements established by the Texas Estates Code. These requirements include mandatory deadlines that creditors must meet to preserve their rights.
Section 355.051 requires the personal representative to approve or reject each claim within thirty days after it is presented. If the representative fails to act within this window, Section 355.052 provides that the claim “is considered rejected by operation of law on the 31st day after the date the claim is filed.” This automatic rejection protects creditors from indefinite delay.
Once rejection occurs, Section 355.064(a) imposes a new deadline on the claimant. That provision states: “A claimant whose claim has been rejected wholly or partly must commence suit on the claim not later than the 90th day after the date of rejection in the court of original probate jurisdiction in which the estate is pending.”
This ninety-day requirement is mandatory. The statute doesn’t distinguish between secured and unsecured claims. Any claimant whose claim is rejected in a dependent administration must file suit within ninety days. The language leaves no room for exceptions. The claimant “must” commence suit within this timeframe.
This deadline differs from independent administrations with executors. Under Bunting v. Pearson, the formal claims procedures—including the ninety-day suit deadline—may not apply to independent executors. However, the In re Estate of Gaines decision clarified that Bunting applies only to independent executors, not independent administrators. Dependent administrations always remain subject to the ninety-day deadline.
The consequences of missing this deadline can be severe. Courts consistently hold that failure to timely file suit requires dismissal of the entire claim. The deadline operates as a statute of limitations that bars any recovery on claims filed in probate court.
What the Secured Creditor Lost vs. What He Retained
The Hernandez case demonstrates exactly what happens when a secured creditor files in probate court, has their claim rejected, and then fails to timely file suit in a dependent administration.
The secured creditor held valid vendor’s liens on three properties. These liens were created when the properties were sold and secured by deeds of trust. The liens gave him a property interest that existed independently of the probate proceeding. His underlying lien rights didn’t depend on filing a claim in probate court.
However, the secured creditor chose to file a claim in probate court. His claim was rejected when the administrator failed to respond within thirty days. The rejection triggered the ninety-day deadline to file suit, which the parties extended to November 1, 2023 by agreement. The secured creditor never filed suit within this timeframe.
More than six months passed before he filed his first amended claim attempting to revive his claims for additional amounts. During this time, the county court authorized sale of the three properties. The secured creditor received approximately $70,000 from these sales. His liens were satisfied and released.
The secured creditor then claimed he was owed additional amounts beyond what the property sales yielded. He sought additional interest that had accrued. He sought late fees. He sought attorney’s fees and costs. These amounts totaled thousands of dollars beyond the $70,000 he had already received.
The county court dismissed these claims as time-barred. The Court of Appeals affirmed, holding that by missing the ninety-day deadline, the secured creditor lost his right to pursue these additional amounts from the estate.
What the secured creditor retained was his lien on the properties themselves. The liens remained valid and enforceable. The properties were sold and the proceeds paid to him up to the amount the properties yielded. His secured interest in the properties was honored throughout the process.
What the secured creditor lost was his right to pursue the deficiency—the amounts claimed beyond what the secured property satisfied. He could not pursue the estate’s general assets for the additional interest, late fees, and attorney’s fees. These claims were barred by his failure to timely file suit.
By missing the deadline, the secured creditor was effectively relegated to preferred debt and lien claim status. He could collect only from the secured property itself. He had no right to pursue deficiencies against the estate’s general assets. This outcome makes sense given the default classification rules. When secured creditors fail to properly pursue their claims within statutory deadlines, the law treats them as having only preferred debt and lien status.
The Takeaway
This case shows what secured creditors lose when they miss the ninety-day deadline to file suit after their claim is rejected in a dependent administration. The secured creditor doesn’t lose their lien rights on the secured property itself—those liens remain valid and the property can be sold with proceeds paid to the creditor up to the amount the property yields. What the secured creditor loses is the right to pursue a deficiency from the estate’s general assets. By missing the deadline, the secured creditor is effectively relegated to preferred debt and lien status, which limits collection to the secured property alone. Interest, late fees, attorney’s fees, and other amounts that exceed the property’s value cannot be pursued against the estate.
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Disclaimer
The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.
