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  1. #1

    Default Debtor Dies While in Bankruptcy

    My question involves bankruptcy in the state of: Louisiana

    The debtor (widowed) died while in bankruptcy 13, does the responsibility pass on to the children or will it be discharge?

  2. #2
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    Default Re: Debtor Dies While in Bankruptcy

    Any remaining creditor claims would be made against the estate.

    The debts aren't inherited.

  3. #3

    Default Re: Debtor Dies While in Bankruptcy

    Is there anyway to prevent this from happening? and what about those property bought in cash while under brankruptcy, and a property filed in the bankruptcy will these be exempted? I need an advice whats the best thing to do. thanks

  4. #4
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    Default Re: Debtor Dies While in Bankruptcy

    Quote Quoting nouseforaname
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    The debtor (widowed) died while in bankruptcy 13, does the responsibility pass on to the children or will it be discharge?
    Sorry for your loss and no, the children are not responsible.

    The death of a debtor is not uncommon so read on...

    1. If the debtor had an attorney, set an appointment with the attorney to discuss how to proceed.

    2. If the Chapter 13 Plan was Confirmed, the Trustee is bound to distribute whatever funds he is holding pursuant to the Order Confirming.

    3. Since Plan payments will no longer be made the Trustee will eventually seek to dismiss the case. Upon dismissal, if the Plan has not been Confirmed, the funds held by the Trustee will be returned to the debtor (presumably via the next of kin), less any amounts properly due to the debtor's attny and the Trustee's fee. Please note that there are two possible ways to avoid dismissal and obtain a Discharge:

    a. If the requirements under 11 USC 1328(b) have been met, a Motion for Hardship Discharge can be filed.

    b. Conversion to a Chapter 7, HOWEVER, this poses a problem as the debtor is required to attend a 341 Creditor's Meeting in the Chapter 7. It is possible to waive the meeting but. . .

    The other problem with obtaining a Discharge is that there is a requirement that the debtor take a Financial Management class and file the Certificate of Completion with the Court. If this has not already been done you have a problem as I do not believe the Court has the authority to waive the requirement. Maybe the Personal Representative of the decedant's estate can take the class on behalf of the debtor but I do not know.

    4. A document called "A Suggestion of the Death of the Debtor" should be filed thus putting all on notice of the death.

    There are other issues as it relates to this situation, such as, if the 13 was not Confirmed and the Trustee is holding non-exempt funds (other than post petition wages) who gets them if the case is converted to a 7. . . the debtor through the next of kin or the Chapter 7 Trustee.

    So, as you can see there are many issues that need to be addressed. Please seek the assistance of counsel.

    Des.

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