Bankruptcy after spouses death

If my spouse dies, I will not be able to afford all our debt. If I go bankrupt, can they take the life insurance money to pay the debts?

Comments for Bankruptcy after spouses death

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Nov 16, 2011
Bankruptcy after spouses death

So sorry about your situation. I know it must be difficult.

When you file for bankruptcy, you must disclose all sources of income for the past three years, and that would include the proceeds from your deceased's husband's policy. So those proceeds would play a role in your bankruptcy if you file after the death of your spouse.

I recommend that you consult with a bankruptcy attorney in your area right away. If your spouse has not already died, after learning more about your situation and evaluating your finances, the attorney may advise that you file for bankruptcy now rather than later. It's also possible after examining your finances that the attorney will find a way for you to avoid bankruptcy entirely. In addition, the attorney will tell you what you should do and not do prior to filing so that if you do go bankrupt to help ensure that you receive the maximum benefit from taking that step. Go here to schedule a FREE consultation with a bankruptcy attorney.

You should also know that you may not be legally responsible for paying all of the debts your deceased spouse leaves behind. When your spouse dies, his/her estate (all of the assets your spouse owns at the time of death) will go through the probate process and your spouse's creditors will apply to the court to be paid from the estate. (If your spouse dies owning very few assets then his or her estate may go through a less formal process than probate.)

If there is not enough money in the estate to pay all of your deceased spouse's debts, then some of his/her debts will not get paid and you will probably not have to pay them either. However, you WILL be legally obligated to pay any remaining debts that you as well as your spouse signed for (joint debt) and if you live in a community property state --Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin -- you may be responsible for paying the debts of your deceased spouse even if you did not sign for them. A bankruptcy attorney will be able to help you identify which debts you will be responsible for, In the meantime however, I recommend you read our deceased person’s debt FAQ to learn more on the subject.

Nov 07, 2015
Life Insurance Proceeds
by: Anonymous

My husband died leaving me with a lot of credit card debts he took out in my name. I want to file chapter 7. Is my life insurance proceeds exempt. It's been since April when I got the proceeds and have had to live off some of it. I get 1818 a month in ss and tiny pension. There are 3 of us that are living off my income. I am 62.

Reply from

We are so sorry to hear of your husband's death. Whether or not the life insurance proceeds are exempt depends on a number of factors, including your state (or federal) bankruptcy exemptions. If it turns out they are not exempt then it's possible that the attorney could help you avoid the debt due to the fraud. We would really recommend you get legal advice from a consumer bankruptcy attorney so you can weigh your options. You can get a a free initial evaluation with a bankruptcy attorney here.

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