Losing a spouse or loved one is a traumatic and life-changing event, to say the least. In addition to grieving, many surviving spouses must face the daunting task of addressing looming financial concerns. Expenses can start to pile up quickly – especially if he/she was the sole provider in your family. And unfortunately, financial decisions often need to be made quickly.
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, it will likely pass on to you. The attorneys at Tolar & Tolar are here to help you navigate this difficult time in your life. Below we will address how bankruptcy can provide financial relief after the loss of a spouse.
How bankruptcy can provide relief after the loss of a spouse
If you are overwhelmed with debt and expenses after the passing of a spouse, filing for bankruptcy can provide the relief you are seeking and give you a fresh start. Widows and widowers are ideal candidates for bankruptcy because they are experiencing sudden and drastic changes to their financial situation. After all, losing a significant portion of your household’s income is a crisis that is not always easy or quick to adjust to.
Bankruptcy cancels many, but not all of your debts. Filing for bankruptcy can:
- Stop or delay foreclosure on your home
- Prevent repossession of your property
- Stop garnishment of your wages
- Pause aggressive collection efforts with an automatic stay
There are two types of bankruptcy to consider: Chapter 13 and Chapter 7.
Chapter 13 bankruptcy
With Chapter 13 bankruptcy, your property is not at risk to be sold by the court as it would be with Chapter 7 bankruptcy. You will develop a plan to repay what you can afford to your creditors over a period of time, which is usually 3 to 5 years. You will also most likely be able to pay creditors less than what you currently owe.
One of the biggest benefits of filing Chapter 13 bankruptcy is that it halts foreclosure, which is often something widows and widowers face. This gives you enough time to come up with a plan that will hopefully free up enough of your income to allow you to catch up on your home, continue making payments and keep your family’s home. To be eligible for Chapter 13 bankruptcy, your debts cannot exceed a specific dollar amount outlined in the Bankruptcy Code and you must have a regular income.
Chapter 7 bankruptcy
Chapter 7 bankruptcy calls for the liquidation of your assets to pay off your debts and is the simplest and quickest form of bankruptcy and is available to individuals, married couples, corporations, and partnerships. Filing for Chapter 7 bankruptcy often makes sense when you don’t have many assets, and it would take years to pay off your debt even when taking extreme measures.
To qualify for Chapter 7 bankruptcy, debtors must pass the bankruptcy means test, which evaluates your income, assets, expenses and family size to determine if you have enough disposable income to repay your debts. Typically, debtors who earn below the median income in the State of Alabama for a family of equivalent size are eligible.
Your specific situation will dictate whether Chapter 13 or Chapter 7 bankruptcy is best for you.
The stigma of bankruptcy often prevents widows and widowers from exploring the relief bankruptcy can provide. But, the truth is more people file bankruptcy each year than you would guess. The trick is finding the guidance you need to navigate the bankruptcy process. That’s where we come in!
Let our family help your family
At Tolar & Tolar Attorneys at Law, we specialize in helping families get back on track after life-changing events – giving them a new and brighter economic outlook. We would appreciate the opportunity to do the same for you. Contact us today for a free consultation!