If you have been named in a will as the executor of an estate, or if you
have been appointed by the court as a personal representative of an intestate
estate (an estate without a will), and as you dove deeper into your duties,
you realized that the decedent passed away, leaving behind a mountain
of debt, you may be wondering, “Can I file for
bankruptcy on behalf of the decedent’s estate?” If you’re wondering
this, it’s a question frequently asked by personal representatives.
If an estate is being probated, it cannot file bankruptcy. The concept
of bankruptcy offering people fresh starts is meant for personal and business
debtors, it’s not meant for estates, executors, heirs, or beneficiaries.
However, if a debtor was in the middle of a
Chapter 7 and he or she passed away, the bankruptcy case would continue and the
executor would still administer the estate; this is covered under
Rule 1016 of the Federal Rules of Bankruptcy Procedure.
Under Rule 1016, it is possible for a decedent’s
Chapter 13 to continue after the debtor passes away, it just depends on the facts
of the case. So, under certain circumstances if the decedent was in the
middle of a Chapter 13 before he or she died, the court
may allow the Chapter 13 case to proceed until it is concluded as if the debtor
had not passed away.
About Insolvent Estates
When people pass away, they either leave behind solvent estates, which
have excess cash to pay all of their debts, or they leave behind insolvent
estates, which have more debt than assets. Debtors often file bankruptcy
when they have something they need to protect. If an estate has no money
to pay its debts, it’s not necessary to file bankruptcy.
Essentially, if an executor or personal representative discovers that the
decedent had a significant amount of debt, he or she would notify the
decedent’s creditors of the death and ask them to refer all claims
to the estate.
If you personally, need help filing bankruptcy in Harrisburg or York, don’t
contact our firm for a free evaluation!