Expert: Terry Leeders - 12/17/2007

Question
From Tennessee:  My 87 y/o mother-in-law has recently become terminally ill, has dementia, is 3 months behind on her bankruptcy payments (not sure of BR category, but she is barely past year 1 of a 5-year repayment plan, mortgage included).  She lives with us now, her home is vacant, my husband does not have POA and is the only surviving relative.  She has not received any default notices.  We have a few questions:  1) What happens if the bankruptcy payments stop altogether?  She requires 24 hour care and we must use her income to pay for her care.  2)  Is my husband, as her only relative and heir, responsible for debts to her estate when she dies?  Of course we realize that her home would be sold to repay the bankruptcy, but if the bankruptcy balance exceeds the proceeds from the sale of her home, will we be responsible for paying the balance?  Her attorney is lax about returning our calls, we can't afford to retain a new attorney.  We plan to request permission from the court to sell her home now, but would like to know what to expect if the sale doesn't cover the debts.  Thank you for your time and any insight you can provide.

Answer
If she wants to walk away from any unexempt assets, she would convert to chapter 7 and just clear out the rest of the unsecured debt.  This would take about 90 days.   The trustee could sell her home if there is unprotected equity in the home.  Now, the attorney may be able to bring a motion to change her plan payments due to the change of circumstances, but you would need to speak to your lawyer about the specifics.  She can also bring a motion to sell her home, and give the proceeds to the chapter 13 attorney to distribute to the creditors as well.  Any of these would be an option for you.