Death Of A Spouse While in Bankruptcy
During a Chapter 7 Bankruptcy
During a married couple's joint bankruptcy, there's always the possibility that a spouse may become incapacitated or die. The bankruptcy law states that if a debtor is incapacitated or dies, the bankruptcy case does not automatically end. If it is a Chapter 7 bankruptcy
and the deceased or incapacitated spouse has not yet attended the First Meeting of Creditors, then someone can testify on their behalf about the deceased or incapacitated debtor's financial circumstances. In the case of the Financial Management Course requirement it can be waived by the bankruptcy court if the court determines that it would be a hardship or impossible for debtor.
During a Chapter 13 Bankruptcy
If a spouse dies or becomes incapacitated during a Chapter 13 bankruptcy
, the court will determine whether the repayment plan can be completed without the debtor, even if it means with less money. If the bankruptcy court determines that the plan cannot be completed without the spouse, it may be converted to a Chapter 7 bankruptcy and discharged. For example, if the breadwinner of the family becomes ill with a terminal disease and is unable to continue the Chapter 13 bankruptcy because of a lack of income and/or additional medical expenses, the bankruptcy court would most likely review the case and determine that it should be converted to a Chapter 7 bankruptcy.