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I had a client who was a 73 year old widow. Her husband had passed away a year before. She was under a great deal of stress as she was trying to pay her deceased husband’s debts on her fixed income. Creditors were calling and harassing her endlessly. The widow was living in her matrimonial home, which had some equity, but the home was in her deceased spouse’s name only.

Her situation was further complicated because the spouse had inherited a rental property from his mother, who passed away over a decade ago, but title had never been transferred into his name. There was enough equity in the rental property to pay most of his debts, so it was unfortunate that the widow didn’t have control over it.

Senior Spousal DebtWhen I met the widow, we reviewed her situation and the options she had. I advised her that the best plan was to assign her husband’s estate into bankruptcy. This would stop the creditors from perusing her, eliminating stress for her immediately.

As a trustee in bankruptcy, I would have the legal authority to get through the legal hoops to get control over the rental property. The property would then be sold and the money received from the sale would cover the cost of the bankruptcy, the legal process and pay all her late husband’s unsecured debts.

Once all the debts were paid in full, we would transfer the title of the matrimonial home into her name so that she would be left with just a mortgage to pay. The legal process and selling of the rental property will likely take a year or more, but the end result will be that the widow remains in the matrimonial home, with the stress of an unmanageable debt load eliminated.

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