Saturday, March 14, 2015

Can a Probate Estate File Bankruptcy?

Rule 1016 of the Federal Rules of Bankruptcy Procedure governs what happens when a debtor is deceased. A probate estate cannot file for bankruptcy. The fresh start goal is personal to the debtor. Allowing a personal representative to substitute would allow them to accomplish indirectly what it could not directly. 

If a debtor passes after filing Chapter 7, the case will continue and the bankruptcy estate will be administered. Rule 1016 will sometimes allow a Chapter 13 case to continue after the debtor’s death, “if further administration is possible and in the best interest of the parties.”

If you or your family are going through the probate process and there were significant debts owed by the deceased individual, your questions should be directed toward a probate attorney.

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