Legal Question in Bankruptcy in New Jersey

Bankruptcy & Death

Those debts that remain during the administration of a chapter 13 plan are not extinguished by the death of the debtor. They remain debts of the estate and should be paid by the decedent's estate in the same priority as any other debt. When it is important, the death does not accelerate the required payments either. Most often, there will not be enough money to pay all of the debts.

As a practical matter, no one should feel obligated to administer the estate unless there will be something left. To tell exactly what to do with this estate, you should get together the Chapter 13 Plan, the record of payments (which the Trustee can provide) and a list of all the other debts and assets of the decedent's estate. Then, pick a lawyer and get a consultation. If cost is an issue, call your county Lawyer Referral Service. Many of these services will arrange a consultation for a very reasonable fee.

As to the advice given to your mother, I would be very cautious. You did not indicate that there was any benefit to your mother or any fraud involved. However, if your mother or the estate is securing a benefit from the creditors because the death has not been reported, there may be fraud. I would advise you to get a second opinion on that issue.