What happens when a debtor dies after a bankruptcy petition is presented?
When a debtor dies after a bankruptcy petition is presented the proceedings will continue as normal, and if an order is made by the court it is a bankruptcy order and is administered accordingly, with some necessary modifications. The deceased debtor’s personal representative or other appropriate person is required to complete a statement of affairs. The reasonable funeral and testamentary expenses have priority over the preferential debts, whether the deceased debtor dies before or after the making of the bankruptcy order. Where a deceased debtor owned property under a joint tenancy and died after a bankruptcy petition was presented but before a bankruptcy order was made, the deceased debtor’s interest in the property passes to the surviving tenant and does not form part of the estate. Section 421A does not apply in this case, and the value lost to the estate cannot be recovered.
