16 Feb What If My Spouse Dies During Our Bankruptcy?
The death of a spouse can be terrible enough under normal life circumstances. The stress of not knowing what is going to happen with all your debt when a spouse dies during your bankruptcy can be horrendous.
Bankruptcy Rule 1016 addresses the death or incapacity of a debtor. In lay terms, it states that if there is a possible way to complete the case, the death or incapacity of a debtor should not end the case.
If the bankruptcy is a Chapter 7 case, the only issues are whether the deceased person has attended the First Meeting of Creditors, and if the Financial Management Course has been completed. If the First Meeting of Creditors has not happened yet, the Court can appoint someone to testify about the financial affairs of the deceased person. Most of the time, that person can be the spouse. As for the Financial Management Course, the Court has the authority to waive the it if it is impossible to take or a hardship.
If the bankruptcy is a Chapter 13 case, the issue is whether the plan can be completed. Sometimes the plan can be modified to complete with less funds. If that isn’t possible, the case could be converted to a Chapter 7 bankruptcy. Another solution is to have family members help pay off the case.
Finally, if you find yourself in this situation, be sure to visit with your attorney about the necessary course of action and options available in your circumstances as soon as practical.
Bankruptcy Law Network (BLN)
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