How Death and Bankruptcy Work in California? THE PROCESS WILL CONTINUE DESPITE THE DEATH OF THE PERSON FILING. WHEN A DEBTOR DIES IN CALIFORNIA, THE BANKRUPTCY IS HALTED AND THE FAMILY IS GIVEN TIME TO MAKE ONE OF TWO CHOICES.
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DEATH DURING A CHAPTER 7 BANKRUPTCY CHAPTER 7 REQUIRES THE LIQUIDATION OF A DEBTOR’S ASSETS. THE MONEY FROM LIQUIDATION IS USED TO PAY OFF THE DEBT. IF SOMEONE PASSES AWAY DURING THEIR PROCEEDING OR BEFORE THE DEBT IS PAID, THE APPOINTED TRUSTEE BY THE BANK WILL CONTINUE PAYING OFF THE DEBTS WITH THE ASSETS SALE’S MONEY.
DEATH DURING A CHAPTER 13 BANKRUPTCY IN CHAPTER 13 BANKRUPTCY, THE FAMILY CAN DO TWO THINGS, EITHER THEY CAN CONTINUE THE PAYMENTS AND PAY OFF THE REST OF THE DEBT TO KEEP THE OF THE ESTATE AND DIVIDE IT AMONG PEOPLE THAT ARE LEFT BEHIND, OR THEY CAN PETITION THE COURT TO DISMISS THE FILE. IN SOME CASES, YOU CAN REQUEST A HARDSHIP DISCHARGE.
SPOUSE DIES DURING A BANKRUPTCY CASE? IF ONE SPOUSE PASSES AWAY DURING BANKRUPTCY, THE PROCEEDING WILL CONTINUE WITH THE ASSETS OF THE DECEASED SPOUSE AND THE REMAINING LIVING SPOUSE. THE PERSON LEFT BEHIND WILL CONTINUE WITH THE BANKRUPTCY AND GO AHEAD AS PLANNED, THE DEBTOR'S NAME WILL SIMPLY BE TAKEN OFF THE PAPERWORK.
SHOULD HEIRS CONTINUE CHAPTER 7 OR CHAPTER 13 BANKRUPTCY CASE YES, HEIRS SHOULD CONTINUE CHAPTER 7 OR CHAPTER 13 BANKRUPTCY CASES. IT IS A LEGAL AND BINDING CONTRACT BETWEEN THE COURT AND THE PERSON THAT FILED FOR BANKRUPTCY. SO, EVEN AFTER DEATH, IT IS STILL BINDING, AND THE PEOPLE LEFT BEHIND ARE STILL GOING TO BE LIABLE FOR REPAYMENT.
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NATHAN A BERNEMAN, APC
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