A relative cosigned on a loan 10 years ago and passed away two years ago. If the borrower files for chapter 7 bankruptcy and gets a discharge can the creditor then try to collect from the estate, even if the money has been distributed according to a valid will? Can they collect from life insurance proceeds paid to a non-cosigning surviving spouse?
This will most likely depend on if a probate case was filed for the deceased person two years ago or not. When someone passes away leaving property to distribute, a probate case should be filed and there should have been a Notice to Creditors placed in the legal news. Creditors have an opportunity to file claims against the estate for a specific period of time. Once that period of time is up, all other creditors that have not submitted a claim will be barred.
I suggest you reach out to a probate attorney in your area to discuss this.
Further, barring any unusual circumstance, the creditor will not be able to collect from the life insurance proceeds. Life insurance proceeds pass to the beneficiary outside of probate, free and clear of any claims of the deceased individual.
If the claim did not arise and get asserted until after relative died, it appears neither the bankrupt nor the deceased co-signor have liability.......provided on the condition that, when the decedent estate was probated, a published notice to unknown creditors was statutorily published in a county newspaper as required by statute. If there is nothing left in that probate, there is nothing to get!!!!! If the creditor continues to "hound", take this to the attorney for the estate or any other expert in the Michigan probate process. Good luck.
This commentary does not result in any attorney/client relationship nor constitute legal advice as to a particular fact situation or status of a reader. Consult and retain legal counsel in the State of Michigan for pursuit of such a relationship.
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