By: Darrell Castle
If your spouse left you with debt you can’t pay, the way out of that situation will vary depending on your situation.
First of all, you can’t file bankruptcy on behalf of someone else; but you can consider bankruptcy for yourself if you are unable to pay debts left behind by your loved one.
When a loved one passes away, his or her estate goes through a probate process to determine who owns what. If your debt was owed jointly, there’s a good chance it will pass on to you. In that case, you could consider bankruptcy as an option for getting rid of that debt. This happens a lot when the main breadwinner in a family dies but also leaves behind large, shared debts like a mortgage.
(Click here to learn about the mighty benefits of a Chapter 13 bankruptcy by downloading my free report, The Power of a Chapter 13 Bankruptcy!)
Some states have community property laws that assume all married couple’s property is jointly owned by both spouses. Often in those states, any debt the deceased person leaves behind is subject to collection by creditors. There are currently nine community property states: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Life insurance can also play a factor in your case. If the person had a significant insurance policy but leaves behind debts that you’re responsible for, the creditors may try to access that life insurance to cover the debt.
Should You Consider Bankruptcy?
Bankruptcy is one option and may help in any of the above situations.
After a loved one’s death, the last thing most people want is to lose the home that reminds them of their spouse, or face harassment from creditors during an already difficult time. Bankruptcy can stop both of those things from happening. Download my free report about stopping creditor harassment to find out more.
Still, not every situation will require bankruptcy.
Our Bankruptcy Attorneys Can Help
Estate issues can get confusing, and if there’s any doubt of what your options are, we encourage you to speak with an estate and/or bankruptcy attorney. Our bankruptcy lawyers in Memphis can help you figure out the best way to move forward; and we don’t push people toward unnecessary bankruptcy if it’s not right for you.
In some cases, it might benefit you to consider bankruptcy as early as possible. Getting rid of the debt before a person has died can help protect the life insurance policy, for example.
Want a FREE Bankruptcy Consultation?
As you can see, a lot of factors affect your potential bankruptcy case. If you want to find out more or have any questions, please call (901) 327-2100 today for a free bankruptcy consultation. Or you can contact us online.
Our bankruptcy attorneys are informative, detailed and really care. And our clients will back that up.
Filing For Chapter 13 Bankruptcy After Inheriting A Loved One’s Debt
Our Memphis, TN Chapter 13 bankruptcy lawyer knows that inheriting a loved one’s debt can be a challenging experience, especially when it places a financial burden on you or your family. For many, Chapter 13 bankruptcy offers a pathway to manage inherited obligations while protecting assets and maintaining financial stability. Chapter 13 is a reorganization bankruptcy, allowing individuals to create a repayment plan based on their income, expenses, and the type of debt they owe. We have been helping clients for 39 years, so speak with our team today.
Inherited Debt And Its Impact
When a loved one passes away, their debts do not always disappear. In many cases, these debts are tied to their estate. If you are named as a beneficiary or executor, you may be tasked with settling these obligations using the estate’s assets. However, there are situations where the estate lacks sufficient resources to cover the debts, potentially leaving you personally responsible for certain financial commitments.
Common examples of debts that could impact heirs include co-signed loans, mortgages, or credit card balances tied to shared accounts. When these financial responsibilities exceed your ability to pay, Chapter 13 can help you regain control by allowing you to reorganize and address the debt through an approved payment plan.
How Chapter 13 Bankruptcy Works
Chapter 13 bankruptcy is designed to help individuals restructure their debts over three to five years. Unlike Chapter 7 bankruptcy, which involves liquidating assets to pay creditors, Chapter 13 focuses on creating a sustainable payment plan while protecting personal property. This type of bankruptcy can be particularly beneficial for inherited debts because it provides flexibility in managing financial obligations over time.
As our Memphis Chapter 13 bankruptcy lawyer can tell you, the process begins by filing a petition with the bankruptcy court. This includes submitting detailed information about your income, expenses, assets, and liabilities. The court reviews your financial situation and works with you to establish a repayment plan that fits your budget. Under Chapter 13, you can consolidate eligible debts, including inherited ones, into a single monthly payment.
Benefits Of Filing Chapter 13 For Inherited Debt
Chapter 13 bankruptcy offers several advantages for individuals dealing with inherited debts. One of the most significant benefits is the ability to prevent foreclosure or repossession of property tied to the debt, such as a home or vehicle. It also allows you to stop collection efforts and wage garnishments, giving you breathing room to focus on your repayment plan.
Additionally, Chapter 13 helps you prioritize different types of debt. Secured debts, like mortgages, are typically handled first, while unsecured debts, such as medical bills or credit card balances, are addressed based on your disposable income. This structure ensures that your payment plan aligns with your financial capabilities while satisfying creditors to the greatest extent possible.
How We Can Help
Filing for Chapter 13 bankruptcy is a significant decision, especially when it involves inherited debt. We work closely with individuals and families to develop practical solutions tailored to their unique situations. Our goal is to help you address inherited financial challenges in a way that safeguards your future. If you’re struggling to manage inherited debt, let’s discuss your options together. Call Darrell Castle & Associates today for a free consultation–we’re here to provide the support you need to move forward with confidence. Call our Chapter 13 bankruptcy lawyer in Memphis now.