Legal Question in Bankruptcy in California

Bankruptcy Rule 1016 may govern what happens to your bankruptcy case should you die prior the completion of your bankruptcy. Should death occur, the bankruptcy court would have a few options to consider under Rule 1016, and the outcome would likely depend upon whether the case could proceed and be concluded in the same manner as if your death had not occurred, and what Chapter, or type, of bankruptcy you filed.

If you die during a Chapter 7, then your bankruptcy would continue as before, and your probate estate would receive a discharge. Therefore, your heirs could keep your exempt assets.

You can learn more details here: http://www.avvo.com/legal-guides/ugc/death-during-bankruptcy