Bankruptcy Options After the Death of a Debtor
Many contracted obligations end after a loved one's passing. In bankruptcy, the case continues. For surviving family members and beneficiaries, this couldn't come at a worse time. While you're trying to grieve for your loved one, a current bankruptcy case continues in their absence. Fortunately, a bankruptcy lawyer understands this frustration and anxiety surrounding a delicate dilemma. Here are the takeaways from each chapter.
- The case remains perpetual until discharge because the trustee is in charge of bankruptcy, not the debtor.
- Creditors can opt to include the debtor's estate as part of the liquidation process.
- Surviving family and beneficiaries decide on how to proceed. The best route brings family members, beneficiaries, the court, and creditors in unison.
- The first course of action, dismissal, is an easy selection that throws the case out. However, the easiest road has a dark side. Creditors will recoup lost finances by going after the estate. Since the deceased needs to become free of debt before issuing funds, its highly likely creditors will win.
- Another choice, continuation, appoints a selected representative to carry on payment duties without interruption.
- The third selection is hardship discharge. Different from a traditional discharge, this course of action grants families and beneficiaries the blessing to erase debt and stop creditors from seeking compensation. Attaining this discharge depends on the survivors proving they cannot pay the debt, and the debtor's death is a plausible reason.
- The fourth offer is liquidation. Converting Chapter 13 to Chapter 7 is better when the debtor is living, but in rare cases, it works in the survivors' favor. After transfer completion, focus on Chapter 7 rules to receive a discharge.
As soon as possible, we want grieving families and beneficiaries to focus on important pressing matters. For more information on bankruptcy, contact us.