' What Happens if Debtor Dies? - Law Offices of Robert M. Geller
CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

What Happens if a Debtor Dies After Filing for Bankruptcy?

It might sound crazy, but it is possible for a person to die once he or she begins filing for bankruptcy. Obviously, as the deceased, you have little concern for the outcome, but your loved ones and others involved in the management of your estate will be forced to deal with the consequences once you are gone. What happens if a debtor dies during the bankruptcy process?

In general, when a person dies, his or her heirs do not become responsible for paying the deceased’s debts, unless those debts were shared. However, the debts are paid out of the deceased’s estates. An in-the-process bankruptcy is handled out of the estate and is not automatically dismissed when the debtor dies. How the estate and bankruptcy are handled is determined by whether a Chapter 7 or Chapter 13 bankruptcy was filed.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy includes the liquidation of a debtor’s assets to pay creditors. This process continues even if the debtor dies. The trustee of the bankruptcy continues to pay creditors out of the liquidation of assets and once complete, the bankruptcy is discharged, just as it would be if the debtor were living.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy requires the debtor to participate in a repayment plan, so things do change once the debtor dies. Most chapter 13 bankruptcies include a repayment plan of three to five years, so if payments stop once the debtor dies the case is dismissed. This means those handling the deceased’s estate must decide whether they want to continue with payments or petition the court to alter the bankruptcy plan.

The court prioritizes the repayment of debts, but offers a few options for those managing the estate of a bankrupted individual. The case can be dismissed, which is the most common resolution. This makes the estate liable to creditors, so loved ones will receive inheritance only if there is anything left after the deceased’s debts are paid.

Another option is to request a hardship discharge, which means all dischargeable debts are eliminated and creditors are not able to seek payment from the estate. Likewise, loved ones can request the case be converted to Chapter 7 and receive a discharge. Finally, they can continue with the Chapter 13 plan until it is complete. In some cases, the court orders the bankruptcy payments continue to completion out of the estate, so loved ones have no choice in the matter.

If you are considering bankruptcy, but you have concerns about your loved ones should your life end, or you are managing the estate of someone who died in the midst of bankruptcy, we can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 to discuss your case.

Archive

Video Testimonials

Tampa Bankruptcy Law Blog

Will Bankruptcy Affect My 401k?

Bankruptcy can be a difficult decision. It’s one that has long-lasting effects on your financial future. One question that often...
Read More

Can Filing for Bankruptcy Affect Your Job?

Filing for bankruptcy can be a challenging decision that is fraught with many concerns. Among them is the fear that...
Read More

Can You Cancel a Bankruptcy?

Bankruptcy is an option that can save individuals and businesses from financial ruin. However, the process can be a long...
Read More

Does Bankruptcy Clear Child Support Arrears?

Bankruptcy is a legal process that provides relief to individuals who cannot pay their debts. One common question among individuals...
Read More

Is Alimony Dischargeable in Bankruptcy?

One of the biggest concerns that people have when considering bankruptcy is the effect on their financial obligations, including spousal...
Read More

Should You File Bankruptcy Before or After Divorce?

Marriage and finances can be a tricky combination. Timing is also an issue when it comes to filing for bankruptcy....
Read More

What’s Better Bankruptcy or Debt Settlement?

The idea of being trapped in debt can be overwhelming and all-consuming. Financial struggles can happen to anyone through no...
Read More

Can I Keep One Credit Card During Bankruptcy?

The decision to file for bankruptcy is never easy. People considering this option often struggle with financial stress, debts, and...
Read More

How Does Inflation Affect Credit Card Debt?

Credit card debt can be overwhelming. This is especially true during times of inflation. What is Inflation? Inflation is a...
Read More

Can Personal Bankruptcy Affect My Business?

If you’re a business owner considering filing for bankruptcy, it’s important to understand how this decision impacts your business. From...
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

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