~~Croaked or Got Disabled~~

[simon2020]

What happens if while you are in your payment plan under Chapter 13, you either:

1. DIE
2. Got disabled and could not work full time and possibly only collected disability checks?

Just a thought since we are all just living "in the moment" so to speak.

[HHM]

Bankruptcy Rule of Procedure 1016 provides the following:

Death or incompetency of the debtor shall not abate a liquidation case under chapter 7 of the Code. In such event the estate shall be administered and the case concluded in the same manner, so far as possible, as though the death or incompetency had not occurred. If a reorganization, family farmer's debt adjustment, or individual's debt adjustment case is pending under chapter 11, chapter 12, or chapter 13, the case may be dismissed; or if further administration is possible and in the best interest of the parties, the case may proceed and be concluded in the same manner, so far as possible, as though the death or incompetency had not occurred.

[justbroke]

What he said. (HHM)

What's interesting to note is the Chapter 7 thing. You can't get out of a Chapter 7, even if you die.

[aa06a47]

What happens if while you are in your payment plan under Chapter 13, you either:


1. DIE
2. Got disabled and could not work full time and possibly only collected disability checks?


Just a thought since we are all just living "in the moment" so to speak.

#1 LOL If it happens, it won't be anything you need to worry yourself with!!!

#2 You would probably have to convert to a chapter 7.

[justbroke]

I forgot to add, that if you're in a Chapter 13 and become disabled, you may qualify for a hardship discharge. I'm not suer if Rule 1016 is one in the same as the hardship discharge.

[simon2020]

So would my house be sold to (there is some equity) cover the balance to be paid to the unsecured creditors?

[AngelinaCatHub]

Simon2020; It would be wise for you to notify the Trustee at least two weeks before dying. If you become crippled, three weeks. Other than that, IRS has first claim on the body. The bk Court next, local lawyers, the vultures. (ahem, just a joke). 'Hub

[simon2020]

Angelina - no worries -- your comments were funny - but seriously, (someone just had a heart attack yesterday and died today) -- so it got me thinking if I'm in the plan and God knows what he has planned for me in the next 36-60 months, will my next of kin lose the house because the Trustee says, hey - he had some equity to pay off these unsecured creditors (assuming it's a 100% plan) and we are going to kick the family out on the streets and sell the house so I can pass the $$$$ to Mr. Visa, Ms. AMEX, Mr. Mastercard, etc.

[AngelinaCatHub]

Is your house with or in your spouses name? Is your state a joint property or right of survivor (jte). Can you 'homestead' your house in your state.

You know 'simon', God only knows the time and from birth, we are dying. I gutted myself with a skill saw stupid, and although I had no pain, or fear, I saw the posibility of my last day. At that time, all I could say other than the first word being an adjetive, noun, and verb starting with an F, is "boy this sure has messed up my day". True story, but I survived to pay and pay again my Trustee. You can't get off that easy so just settle in to living long enough to make the Trustee happy.

It won't be your time 'til God is done with you. 'Hub

[AngelinaCatHub]

OOOoopps I see. You live where I do. NE FL. Yes we are a homestead state. If you filed a Homestead exemption 25K, you are homesteaded. If not, do this by March. You may wish to make an afidavit of homestead and record it in the Public Records. You have no house problems as they cannot take your house except for Ad Valorum Taxes in three years of non payment or default on a mortgage. IRS can do anything. Hope this helps. 'Hub

[liz417]

Simon2020; It would be wise for you to notify the Trustee at least two weeks before dying. If you become crippled, three weeks. Other than that, IRS has first claim on the body. The bk Court next, local lawyers, the vultures. (ahem, just a joke). 'Hub

Hee,hee

[woeisme]

If you are really concerned about this, maybe you should look into some term life insurance? My trustee allowed my $15.75/month life insurance payments for a $100,000 policy as part of my expenses in my CH 13 plan. If something happens to me before we finish our 13, worst case scenario is that hubby could use that money to buy out or plan (best case is he converts to a CH 7). I also have a 60K policy that my work provides for free, so I didn't know if trustee would allow the additional policy, but wasn't an issue. If you haven't file CH 13 yet, really want to look into it. My trustee allows terms insurance, but whole life plans (which are essentially investments) aren't allowed.

[Introuble2008]

I asked our attorney about this. If one of us died, we'd have the attorney re-evaluate income, etc. If the remaining spouse's income puts them below the mean, then he would apply to have the Chapt 13 changed to a chapt. 7. Seems the same would apply if you were to be disabled. I didn't ask about if both parties died at the same time......I wasn't worried about my HEIRS getting anything -- LOL - they KNOW they're not getting anything!!!

[hey72]

Life insurance money belongs to the heir, not the courts. If the recipient is not involved in the ch. 13, the court has absolutly no right to the money.

[Flamingo]

Life insurance money belongs to the heir, not the courts. If the recipient is not involved in the ch. 13, the court has absolutly no right to the money.

One can have a life insurance policy with their Estate as the beneficiary. One can also carry mortgage insurance in that if one dies, the mortgage is paid off. It's all about planning. All debts of the deceased are to be paid by the estate (Executor/Executrix) before other disbursements are made. Also, if there is life insurance payable to the heirs (children/spouse), most heirs utilize that to pay bills (i.e. funeral costs) if there is not enough in the estate to cover all outstanding bills.