CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

What Happens If Someone Dies Mid-Bankruptcy? Here’s What You Need to Know about Death and Bankruptcy

Death And Bankruptcy Tampa, Florida. Death and Bankruptcy

The average person files for bankruptcy receives their debt discharge and moves on with their life. They are happier and financially healthier than ever before and bankruptcy allowed them to get a fresh start in life. But in some rare cases, the person filing for bankruptcy dies before the process is complete. Although death and bankruptcy don’t often occur at the same time, it helps to know what to expect if this happens to someone with whom you have a financial link.

As if often the case, the chapter of bankruptcy affects how death and bankruptcy are handled. Here’s what you should know:

Chapter 7 Bankruptcy and Death

If you’re concerned about what you’ll leave behind for your family if you file for chapter 7 bankruptcy and die before the process is complete, you don’t need to worry. The profits from non-exempt debts satisfy all or a portion of the debt. Then the court discharges any remaining debt. The process is all but identical to what it would be if you were alive to complete it.

However, if you die before the meeting of creditors or the completion of the financial management course, your bankruptcy case will be dismissed, just as it would be if you were alive. The bad news is your heirs will be forced to pay your debt out of your estate and your assets won’t have the protection they’d have if you’d completed filing.

The lesson here?

Move the Chapter 7 bankruptcy process along as quickly as you can, just in case something happens. Even if you are in perfect health and don’t anticipate a problem, the best thing you can do for your loved ones is to do all you can to get your ducks in a row and have the greatest likelihood for the court discharging your debt.

Chapter 13 Bankruptcy and Death

Dying mid-way through completing Chapter 13 bankruptcy is more complicated than it is with Chapter 7.

Chapter 13 bankruptcies establish a repayment plan that typically lasts three to five years. Because the length of time it takes to complete this chapter is significantly longer, there’s a higher likelihood of someone dying mid-way through the process.

Chapter 13 bankruptcy requires a significant long-term commitment from a debtor. If you die before meeting your obligations, your heirs have two options:

  1. They can request the court dismiss the Chapter 13 case
  2. They can continue making payments under the existing Chapter 13 arrangement

Which of these options is best varies from case to case. Most of the time, when heirs choose to complete the Chapter 13 arrangement, it’s because it was near the end of the repayment plan. Making payments means they tie up the loose ends of the bankruptcy case and protect the assets in the estate.

It might be easier to close the bankruptcy case of someone who dies before a significant amount of their debts are paid off and the majority of their debt is unsecured. Most unsecured debt isn’t passed on to the heirs of an asset, so there isn’t much incentive to pay them off.

If you’d like to learn more about the differences between these two types of bankruptcy, check out this information.

A Bankruptcy Attorney Can Help You Make Decisions about an Estate Affected by Bankruptcy

It’s tricky handling the estate of a loved one who filed for bankruptcy. You must also protect your family in the event of your death if you file. Every case is different, so you must speak to a bankruptcy attorney who can review your situation and help you make the best decisions.

For more information or to schedule a consultation, contact the Law Office of Robert M. Geller at 813-254-5696.

Archive

Tampa Bankruptcy Law Blog

Signs That You May Need to File Bankruptcy [Infographic]

What are the Signs You Might Need to File for Bankruptcy? Not everyone who struggles financially has to file for...
Read More

What You Should Know about Filing for Bankruptcy Multiple Times

Filing for Bankruptcy Multiple Times As hard as it might be for someone who has never considered filing to believe,...
Read More

Wondering How to Remain Eligible for Financial Aid? Here’s What You Should Know about Getting a Loan to Help Your Child Pay for College After Filing for Bankruptcy

How to Remain Eligible for Financial Aid Many parents want to help their children pay for college. But how do...
Read More

What Seniors Need to Know about Bankruptcy

Bankruptcy for Seniors Facing bankruptcy at any age is tough, but bankruptcy for seniors is especially difficult. When you’re relying...
Read More

Should We Expect a Huge Rise in Bankruptcies Due to COVID-19 and Will You Be a Part of It?

COVID-19 News and What's Ahead for the New Year The latest COVID-19 news predicts that there will be a rash...
Read More

Why Does Bankruptcy Take So Long? How a Bankruptcy Law Firm Helps Make the Process as Efficient as Possible

Bankruptcy Law Firm Have you begun the bankruptcy process and you’re wondering why it’s taking so long? You aren’t the...
Read More

When Is It Too Late to Stop Foreclosure? Here’s What You Should Know If You Are Behind On Your Mortgage

When Is It Too Late to Stop Foreclosure? When is it too late to stop foreclosure and is bankruptcy your...
Read More

How to Avoid Being a Victim of Scam Calls for Student Loans

Scam Calls for Student Loans Student loans are one of the biggest burdens faced by college attendees. Even students who...
Read More

Can Medical Bills Be Included in a Bankruptcy? Here’s What You Need to Know

Can Medical Bills Be Included in a Bankruptcy? Medical problems are stressful enough without facing a significant debt burden after...
Read More

I’m Unemployed. Can I Still File for Bankruptcy?

Unemployed Bankruptcy Being in debt is bad enough, but if you’ve lost your job recently or accumulated debt because of...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

NACBA Logo comodo avvo1 avvo2 avvo3 LEA BBB Logo RG Seal

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions