A tragic tale that's probably all too familiar has struck me personally

[FrugalSaver]

A dear loved one's father just passed away tragically and unexpectedly at the age of 65. Fell on the ice, broke ribs, went to emergency room, X-rays, sent him home, drowned from a puncture 36 hours later.

He had a $100,000 life insurance policy.

He had about $1,400 / month in SS

Both their 401k's are largely tapped

She (aged 65) receives about $1,000 / month in SS. Now she will receive his $1,400 but no longer her $1,000 so they go from 2 people earning $2,400 to one earning $1,400.

They have a house payment of about $1,600 / month.  I believe there's over $100,000 owed on the house but am confirming. Worth about $300,000.

Why do y'all see as options?  Obviously selling the house is one.

Is bankruptcy likely?  Should it he avoided?  Pursued?

Hard to think straight in this heartbroken time but welcome your thoughts.

[SKL-HOU]

Bankruptcy for what? You didn't mention any debt.

[FrugalSaver]

Bankruptcy for what? You didn't mention any debt.

How does it work with the house she can't afford?  I'm assuming I will be helping her sell it but if not, is a house protected in bankruptcy?

[RedwoodDreams]

Bankruptcy for what? You didn't mention any debt.

How does it work with the house she can't afford?  I'm assuming I will be helping her sell it but if not, is a house protected in bankruptcy?

Very sorry for your loss.

If she can sell and net 200k, she'd have 300k, right? Between that and her SS, given her age, and depending on COL where she lives, she could be just fine. If they were living fine on $2400, it means she needs another $1000 income per month.

I use this calculator all the time to see how long different amounts of money will last:

http://www.calcxml.com/calculators/how-long-will-my-money-last?skn=

300k earning 5% will last 30 years, for example.

[FrugalSaver]

I failed to mention about $50,000 in credit card debt.

Are there viable options for debt forgiveness / reduction in this situation?

[Paul der Krake]

Option 1:

Pay off the house, live on the $1400 Social Security.
Negotiate the debt to pay it off slowly.

Option 2:

Immediately pay off the credit card debt using half the life insurance proceeds.
Sell the house, find cheap senior housing.

[Dicey]

Ouch, so sorry for everyone's loss. If the house is in good shape and a place where she can live safely, possibly a reverse mortgage, but she's too young to get very much, so a sub-optimal idea at best. Are there two cars? If so, dump one, especially if there's still a loan.

After a period of mourning, start looking at Senior Housing in a LCOLA, tax-friendly state such as Florida. Sell the now neat and decluttered home, invest the proceeds along with the remaining LI, less any CC debt she's liable for (assume all, so 50k).

Also, consult a medical malpractice attorney???

[Cyanne]

If the credit card debit is in the deceased husband's name only she would not necessarily be responsible for paying it off. If it is a joint account then she is.

Bankruptcy may discharge the joint credit card debt but it would depend upon which state she lives in whether or not the equity in the house would be protected. If the court does not sell the house, she would still be responsible for the remaining mortgage.

[Malum Prohibitum]

How does it work with the house she can't afford?  I'm assuming I will be helping her sell it but if not, is a house protected in bankruptcy?

 

The house is secured by a security interest called a mortgage.

Bankruptcy is for unsecured debt.

Basically, she has to affirm the debt to keep the house, which means that the mortgage payments continue.

Mortgage payments of $1600 are absolutely insane.  They were insane for her situation with her husband still alive.  They are even more insane now.  Sell the freakin' house.  What does one single lady need a gigantic house for?  She has $200,000 in equity.  Sell it before creditors start suing and attaching it with judgments.

CREDIT CARD DEBT
As for the $50,000 credit card debt - How much of it is in her name?  It may not be her debt at all.  It may die with her husband.  You need to do more investigation.

[Malum Prohibitum]

She (aged 65) receives about $1,000 / month in SS. Now she will receive his $1,400 but no longer her $1,000 so they go from 2 people earning $2,400 to one earning $1,400.

  Is that how it works?  I had no idea.

[FrugalSaver]

Some additional info.

The house was bought for $220,000 in October 2016

It may be able to be sold for $240,000-250,000.

Thanks for the other questions. I still have much intel to gather. It's hard right now as everyone is in shock. I'm mainly worried about his wife'a frail state and keeping her alive through this. Funeral is Thursday so getting through that will help some.

[chasesfish]

Sell the house and use the life insurance policy plus the house proceeds to payoff all debt and buy a lifetime annuity from Fidelity.

That should get her income up to $2200+/mo, then she'll need to live on that.

[marion10]

She (aged 65) receives about $1,000 / month in SS. Now she will receive his $1,400 but no longer her $1,000 so they go from 2 people earning $2,400 to one earning $1,400.

  Is that how it works?  I had no idea.

I think the amounts are probably a little off. The wage earner gets 100 percent benefit and spouse gets 50 percent of wage earner benefit.

So wage earner 2000 and spouse 1000= 3000.
Wage earner dies, spouse gets wage earner amount and spousal goes away= 2000.

There are some variations if both are wage earners.

[FrugalSaver]

She (aged 65) receives about $1,000 / month in SS. Now she will receive his $1,400 but no longer her $1,000 so they go from 2 people earning $2,400 to one earning $1,400.

  Is that how it works?  I had no idea.

I think the amounts are probably a little off. The wage earner gets 100 percent benefit and spouse gets 50 percent of wage earner benefit.

So wage earner 2000 and spouse 1000= 3000.
Wage earner dies, spouse gets wage earner amount and spousal goes away= 2000.

There are some variations if both are wage earners.

Accoording to this linke https://www.nasi.org/learn/socialsecurity/widowed-spouses it seems that since they both earned social security, but her social security was less than his, she will now receive the amount that he was receiving.  He received $1,400 and she received $1,000 for a total of $2,400.  She will now receive $1,400 per the article.

I'm gathering info for when I talk with a professional as well but does anyone on here know for sure?  For now, I'm modeling that she will receive $1,400 in my calculations.

[Laura33]

She (aged 65) receives about $1,000 / month in SS. Now she will receive his $1,400 but no longer her $1,000 so they go from 2 people earning $2,400 to one earning $1,400.

  Is that how it works?  I had no idea.

I think the amounts are probably a little off. The wage earner gets 100 percent benefit and spouse gets 50 percent of wage earner benefit.

So wage earner 2000 and spouse 1000= 3000.

Wage earner dies, spouse gets wage earner amount and spousal goes away= 2000.

There are some variations if both are wage earners.

Accoording to this linke https://www.nasi.org/learn/socialsecurity/widowed-spouses it seems that since they both earned social security, but her social security was less than his, she will now receive the amount that he was receiving.  He received $1,400 and she received $1,000 for a total of $2,400.  She will now receive $1,400 per the article.

I'm gathering info for when I talk with a professional as well but does anyone on here know for sure?  For now, I'm modeling that she will receive $1,400 in my calculations.

This is exactly correct -- at least, this is how it worked for my mother after my stepdad died.  One survivor, alas, gets only the higher of the two benefits, not both.

Very sorry for your loss.  I very, very rarely suggest going to a lawyer, but I second the advice to talk to someone -- a broken rib/punctured lung would seem to be a fairly simple diagnosis.  The lawyer should not charge for the consultation and review of the medical file.  She might not even have to go to trial but may be able to negotiate a settlement that will provide a little more cushion (although given the ages and retired status of the dad here, it may not be that large -- but, again a lawyer can tell you whether it is worth the time and effort).  Given the stress the mom is under, maybe you can get her permission to get the medical records and check out that avenue??

[FrugalSaver]

She (aged 65) receives about $1,000 / month in SS. Now she will receive his $1,400 but no longer her $1,000 so they go from 2 people earning $2,400 to one earning $1,400.

  Is that how it works?  I had no idea.

I think the amounts are probably a little off. The wage earner gets 100 percent benefit and spouse gets 50 percent of wage earner benefit.

So wage earner 2000 and spouse 1000= 3000.

Wage earner dies, spouse gets wage earner amount and spousal goes away= 2000.

There are some variations if both are wage earners.

Accoording to this linke https://www.nasi.org/learn/socialsecurity/widowed-spouses it seems that since they both earned social security, but her social security was less than his, she will now receive the amount that he was receiving.  He received $1,400 and she received $1,000 for a total of $2,400.  She will now receive $1,400 per the article.

I'm gathering info for when I talk with a professional as well but does anyone on here know for sure?  For now, I'm modeling that she will receive $1,400 in my calculations.

This is exactly correct -- at least, this is how it worked for my mother after my stepdad died.  One survivor, alas, gets only the higher of the two benefits, not both.

Very sorry for your loss.  I very, very rarely suggest going to a lawyer, but I second the advice to talk to someone -- a broken rib/punctured lung would seem to be a fairly simple diagnosis.  The lawyer should not charge for the consultation and review of the medical file.  She might not even have to go to trial but may be able to negotiate a settlement that will provide a little more cushion (although given the ages and retired status of the dad here, it may not be that large -- but, again a lawyer can tell you whether it is worth the time and effort).  Given the stress the mom is under, maybe you can get her permission to get the medical records and check out that avenue??

Thank you for your thoughts. We will be talking to someone just to see what the options are.

I've also learned of a 2nd lien on the house which I expected to discover.

Now it's looking like the following debts have been identified so far:

- $138,000 left on first mortgage (20 years started in 2006), 10 years left
- 2nd mortgage of about $62,000
- total house payments including all PITI of about $2,300
- about $100,000 of credit card debt

This should be a lesson to all that I know many of you know very well from yourselves or your families. Such a sad situation.

[former player]

So, a total of about $300k in debt.  House worth $240k and insurance of $100k.  All told, in the end that's capital of about $30k and annual income of $16.8k.

So yes, the house probably has to be sold.  (The only way not to sell it is if it could be rented out for more than the carrying costs of $1600+ per month, which seems highly unlikely.)  Can the widow live with a child or other relative for a little while, to stabilise her during the early stages of grief and enable the house to be prepped for sale?  After that, she needs low income/seniors housing, and should be able to manage a modest life on that income.

It might be the case that if some of the credit card debt is in the husband's name only, that the widow is not responsible for it.  But the debt is due out of the husband's estate, which will certainly include at least some of the value of the house and may also include the insurance pay out, depending on how the benefit of it is payable, so trying not to pay the husband's credit card debt will complicate dealing with the estate and may not be much of an advantage.

I'm not convinced that suing the hospital is necessarily a good idea.  Apparently X-rays were done and the broken ribs diagnosed.  There is very little treatment for broken ribs, other than resting.   It is quite likely that there was no (provable) medical malpractice - while the lung puncture might have been caused by the original injury it might not have been diagnosable at that stage, or it might equally have occurred after the husband left hospital.  There might be a case if the husband was not properly warned about the symptoms of a lung puncture, as he should have been straight back to the hospital at the first symptoms.  Whatever the case, suing is not going to be a slam dunk or a quick and easy solution to the current financial problems.

[Dicey]

Thank you for your thoughts. We will be talking to someone just to see what the options are.

I've also learned of a 2nd lien on the house which I expected to discover.

Now it's looking like the following debts have been identified so far:

- $138,000 left on first mortgage (20 years started in 2006), 10 years left
- 2nd mortgage of about $62,000
- total house payments including all PITI of about $2,300
- about $100,000 of credit card debt

This should be a lesson to all that I know many of you know very well from yourselves or your families. Such a sad situation.

I think you have a typo in Reply #10. They bought in 2006, not 2016, right?

In light of your new info and MP's legal POV, I'd affirm my advice to seek legal council. Probably a Bankruptcy Lawyer and a Malpractice Lawyer are in order. Most likely not the same person.

[Much Fishing to Do]

I guess I'm not following this.  From what I'm reading their 401ks were tapped out and before the spouse died their combined SS payment was about equal to their mortgage payment, and they had $100k in credit card debt.  How did they pay for food, electricity, etc?  With the credit cards?

[Paul der Krake]

What a clusterfuck.

Your friend needs to sit down and go over every single assert and liability, figure out the exact terms for each, and leave no stone unturned.

Like, yesterday.

[FrugalSaver]

So, a total of about $300k in debt.  House worth $240k and insurance of $100k.  All told, in the end that's capital of about $30k and annual income of $16.8k.

So yes, the house probably has to be sold.  (The only way not to sell it is if it could be rented out for more than the carrying costs of $1600+ per month, which seems highly unlikely.)  Can the widow live with a child or other relative for a little while, to stabilise her during the early stages of grief and enable the house to be prepped for sale?  After that, she needs low income/seniors housing, and should be able to manage a modest life on that income.

It might be the case that if some of the credit card debt is in the husband's name only, that the widow is not responsible for it.  But the debt is due out of the husband's estate, which will certainly include at least some of the value of the house and may also include the insurance pay out, depending on how the benefit of it is payable, so trying not to pay the husband's credit card debt will complicate dealing with the estate and may not be much of an advantage.

I'm not convinced that suing the hospital is necessarily a good idea.  Apparently X-rays were done and the broken ribs diagnosed.  There is very little treatment for broken ribs, other than resting.   It is quite likely that there was no (provable) medical malpractice - while the lung puncture might have been caused by the original injury it might not have been diagnosable at that stage, or it might equally have occurred after the husband left hospital.  There might be a case if the husband was not properly warned about the symptoms of a lung puncture, as he should have been straight back to the hospital at the first symptoms.  Whatever the case, suing is not going to be a slam dunk or a quick and easy solution to the current financial problems.

Certainly appreciate your opinions. We're not the type of family that wants to sue anyone unnecessarily. I have to look at all options. Nothing about the discussion with the doctor ever suggested death was on the table but sometimes you just don't know. We understand that and none of it brings him back.

[FrugalSaver]

Thank you for your thoughts. We will be talking to someone just to see what the options are.

I've also learned of a 2nd lien on the house which I expected to discover.

Now it's looking like the following debts have been identified so far:

- $138,000 left on first mortgage (20 years started in 2006), 10 years left
- 2nd mortgage of about $62,000
- total house payments including all PITI of about $2,300
- about $100,000 of credit card debt

This should be a lesson to all that I know many of you know very well from yourselves or your families. Such a sad situation.

I think you have a typo in Reply #10. They bought in 2006, not 2016, right?

In light of your new info and MP's legal POV, I'd affirm my advice to seek legal council. Probably a Bankruptcy Lawyer and a Malpractice Lawyer are in order. Most likely not the same person.

Yes. They've owned the house for 10 years and purchased it in 2006

[FrugalSaver]

I guess I'm not following this.  From what I'm reading their 401ks were tapped out and before the spouse died their combined SS payment was about equal to their mortgage payment, and they had $100k in credit card debt.  How did they pay for food, electricity, etc?  With the credit cards?

I'm not sure. Probably just adding to credit card debt. Attempts to discuss this before the tragedy suggested things were under control without their daughter being belligerent and demanding info.  In hindsight, I'm sure she may wish she had pushed more but what's done is done.

[Catbert]

If BK is a possibility/liklyhood don't sell the house, apply for insurance payout, or take money out of IRA or 401k until you've talked to attorney.

[Davids]

I think someone mentioned but the widow should file a lawsuit against the hospital, seriously I would think a puncture should not be missed in the ER.

[Abe]

What were the circumstances of his death? Did he die at home after sudden decompensation, or in the hospital? It's quite rare for this to happen in the manner described. If he developed some other complication like a pneumonia or embolism it's a different matter. Before running after the hospital I'd done the resources and sort out the finances. <15% of malpractice lawsuits lead to judgements in favor of the patient.

[desertadapted]

You should assist her in consulting BK counsel in order to get an informed opinion.  She should be eligible for chapter 7 (rather than 13) and, depending on her state, some or all of the home equity may be exempt from unsecured creditors.  Given the massive debt and fixed income, and lack of any future earning potential, I'd avoid trying to solve this one on the internet.  Typical Mustachian tools are geared to a slightly different situation. This one's going to take some legal lifting. 

[FrugalSaver]

What were the circumstances of his death? Did he die at home after sudden decompensation, or in the hospital? It's quite rare for this to happen in the manner described. If he developed some other complication like a pneumonia or embolism it's a different matter. Before running after the hospital I'd done the resources and sort out the finances. <15% of malpractice lawsuits lead to judgements in favor of the patient.

As best I can tell from getting her to relive the event, he slipped and fell in his driveway around 7pm Tuesday night. They immediately went to the emergency room.  Xrays we're done and it was determined he cracked ribs 7-10 on his left side. They told him there wasn't much they could do but he could stay or go home. He chose go home.

He didn't eat for the next two days and basically just sat in a chair from Tuesday night until he died around 8pm Thursday.

The last hour of his life is confusing and a little less clear. As best his wife can recall (she was in the house with him the whole time), He felt he was severely constipated (his stomach had become distended as well) and had tried taking some laxatives. He then started puking up blood and passed out. Wife immediately called 911 and did cpr on him for 10 minutes until the paramedics arrived.

The hospital gave him no drugs, antibiotics, laxatives, etc and simply prescribed rest for the next several weeks to heal, never suggesting it was anything worse than a run of the mill cracked rib

[Malum Prohibitum]

You should assist her in consulting BK counsel in order to get an informed opinion.  She should be eligible for chapter 7 (rather than 13) and, depending on her state, some or all of the home equity may be exempt from unsecured creditors.  Given the massive debt and fixed income, and lack of any future earning potential, I'd avoid trying to solve this one on the internet.  Typical Mustachian tools are geared to a slightly different situation. This one's going to take some legal lifting.

  Well, you can look up her exemption using the internet (the exemption is the amount of equity she can protect from creditors), which will give you some idea of whether it is worth it.  https://www.legalconsumer.com/bankruptcy/laws/
But she will still have to sell the house, because she cannot pay the monthly payments.

Is she the beneficiary on the insurance policy?

How much of the credit card debt is she responsible for?

[FrugalSaver]

You should assist her in consulting BK counsel in order to get an informed opinion.  She should be eligible for chapter 7 (rather than 13) and, depending on her state, some or all of the home equity may be exempt from unsecured creditors.  Given the massive debt and fixed income, and lack of any future earning potential, I'd avoid trying to solve this one on the internet.  Typical Mustachian tools are geared to a slightly different situation. This one's going to take some legal lifting.

  Well, you can look up her exemption using the internet (the exemption is the amount of equity she can protect from creditors), which will give you some idea of whether it is worth it.  https://www.legalconsumer.com/bankruptcy/laws/
But she will still have to sell the house, because she cannot pay the monthly payments.

Is she the beneficiary on the insurance policy?

How much of the credit card debt is she responsible for?

Thanks for the link.

She is the beneficiary. If it's a $100,000 policy, does she get $100,000 or are there fees, taxes, etc?

I believe she's responsible for 100% of the cc debt as their names are both on the cards

[Malum Prohibitum]

She is the beneficiary. If it's a $100,000 policy, does she get $100,000 or are there fees, taxes, etc?

  It will pass free of federal estate tax, and it will not go though probate, meaning that HIS creditors cannot get to it.

I believe she's responsible for 100% of the cc debt as their names are both on the cards

  Your belief is unfounded.  They must be joint account holders to be jointly obligated.  Merely being an authorized user is insufficient.   Unless they applied for a card together, they are not both obligated.

For example.  I am married.  I have credit cards for which I applied.  I added my wife as an authorized user.   She is not responsible for that debt.  I am.

Many banks will not even issue joint accounts in 2017.

You need to do more digging.

[Malum Prohibitum]

What happens to my credit card debt when I die?  http://www.creditcards.com/credit-card-news/credit-card-debt-death-1282.php

[FrugalSaver]

She is the beneficiary. If it's a $100,000 policy, does she get $100,000 or are there fees, taxes, etc?

  It will pass free of federal estate tax, and it will not go though probate, meaning that HIS creditors cannot get to it.

I believe she's responsible for 100% of the cc debt as their names are both on the cards

  Your belief is unfounded.  They must be joint account holders to be jointly obligated.  Merely being an authorized user is insufficient.   Unless they applied for a card together, they are not both obligated.

For example.  I am married.  I have credit cards for which I applied.  I added my wife as an authorized user.   She is not responsible for that debt.  I am.

Many banks will not even issue joint accounts in 2017.

You need to do more digging.

Good to know. Thanks!  I'll check into that on the credit cards.

If it's in his name with her as an authorized user,what would that mean for the ~$100,000 in debt.

[FrugalSaver]

In addition to gathering all this information, what other things should I be doing?  I'm certain I'm missing a lot of stuff.

Are there any posts on here or other links someone could point me to?  I'm binging and googling too.

[FrugalSaver]

New info. Apparently there's $800,000 in a private company of which they are one of many shareholders.

I'm understanding they can only get to the money if the company sells. Digging more into that.

[MommyCake]

If your friend's parents live in one of these (community property) states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin - I believe the wife is responsible for the credit card debt.  If she is only an authorized user, and lives in another state, she is not responsible for the debt - the husband's estate is. 
https://www.nerdwallet.com/blog/insurance/debts-after-death-life-insurance/
I would consult a lawyer at a firm regarding both the handling of debts/assets and the possibility of malpractice.  If malpractice is suspected sometimes the hospital will try to settle out of court.  It's worth looking into.  My ex-husband once had a motorcycle accident and had fractured ribs and they kept him in a special room (resuscitation room? memory fails me) until they were sure his lung was not punctured. 

[Abe]

What were the circumstances of his death? Did he die at home after sudden decompensation, or in the hospital? It's quite rare for this to happen in the manner described. If he developed some other complication like a pneumonia or embolism it's a different matter. Before running after the hospital I'd done the resources and sort out the finances. <15% of malpractice lawsuits lead to judgements in favor of the patient.

As best I can tell from getting her to relive the event, he slipped and fell in his driveway around 7pm Tuesday night. They immediately went to the emergency room.  Xrays we're done and it was determined he cracked ribs 7-10 on his left side. They told him there wasn't much they could do but he could stay or go home. He chose go home.

He didn't eat for the next two days and basically just sat in a chair from Tuesday night until he died around 8pm Thursday.

The last hour of his life is confusing and a little less clear. As best his wife can recall (she was in the house with him the whole time), He felt he was severely constipated (his stomach had become distended as well) and had tried taking some laxatives. He then started puking up blood and passed out. Wife immediately called 911 and did cpr on him for 10 minutes until the paramedics arrived.

The hospital gave him no drugs, antibiotics, laxatives, etc and simply prescribed rest for the next several weeks to heal, never suggesting it was anything worse than a run of the mill cracked rib

I think he may have had a spleen or liver laceration causing internal bleeding. Was an autopsy done? If so and this was identified there may be a case. Lower rib fractures in older people are a risk factor for those injuries. Sorry for the loss.

[FrugalSaver]

What were the circumstances of his death? Did he die at home after sudden decompensation, or in the hospital? It's quite rare for this to happen in the manner described. If he developed some other complication like a pneumonia or embolism it's a different matter. Before running after the hospital I'd done the resources and sort out the finances. <15% of malpractice lawsuits lead to judgements in favor of the patient.

As best I can tell from getting her to relive the event, he slipped and fell in his driveway around 7pm Tuesday night. They immediately went to the emergency room.  Xrays we're done and it was determined he cracked ribs 7-10 on his left side. They told him there wasn't much they could do but he could stay or go home. He chose go home.

He didn't eat for the next two days and basically just sat in a chair from Tuesday night until he died around 8pm Thursday.

The last hour of his life is confusing and a little less clear. As best his wife can recall (she was in the house with him the whole time), He felt he was severely constipated (his stomach had become distended as well) and had tried taking some laxatives. He then started puking up blood and passed out. Wife immediately called 911 and did cpr on him for 10 minutes until the paramedics arrived.

The hospital gave him no drugs, antibiotics, laxatives, etc and simply prescribed rest for the next several weeks to heal, never suggesting it was anything worse than a run of the mill cracked rib

I think he may have had a spleen or liver laceration causing internal bleeding. Was an autopsy done? If so and this was identified there may be a case. Lower rib fractures in older people are a risk factor for those injuries. Sorry for the loss.

Thank you for your thoughts. An autopsy was done yesterday.

[Gondolin]

What state you are in?

In the best case scenario she is:

A) Not responsible for any of the CC debt
B) Getting $100K

In this case she can pay off the second mortgage and part of the first. Then, she may be able to continue with the mortgage payments using SS. Getting any part of that $800K back would obviously be a huge boon but...as senior cash investors in a private business that money is probably gone.

Otherwise, contact a reputable bankruptcy attorney. Paying off mortgages with the $100K and then filing Chapter 7 to discharge the CC debt is likely the way to go. But, eligibility rules and means tests vary by state so contact an attorney!

[Iplawyer]

What state you are in?

In the best case scenario she is:

A) Not responsible for any of the CC debt
B) Getting $100K

In this case she can pay off the second mortgage and part of the first. Then, she may be able to continue with the mortgage payments using SS. Getting any part of that $800K back would obviously be a huge boon but...as senior cash investors in a private business that money is probably gone.

Otherwise, contact a reputable bankruptcy attorney. Paying off mortgages with the $100K and then filing Chapter 7 to discharge the CC debt is likely the way to go. But, eligibility rules and means tests vary by state so contact an attorney!

No - typically she can go to every other investor and see if she can work out a deal - and tell them all she is going to sell her interest for whatever she can get.  If it is an ongoing interest - the rest of the investors will do what is right and buy her out.  If not - she can sell it to the highest bidder. 

[Gondolin]

No - typically she can go to every other investor...

Are you responding to my statement about the 800K business investment? If so, it's possible you're right. Really, there's not enough information here to draw any conclusions. So in that spirit I can retract that statement. I made a pessimistic assumption based on the poor state of the couple's finances. Older people with heavy CC debt, 2 mortgages and no liquidity are rarely models of savvy business investment.

In any case, OP - you (obviously) need to gather much more information on the legal structure of this investment and investigate any options for selling.

[desertadapted]

+1 to Gondolin & MommyCake.  Again, you need reputable BK counsel who has a handle on applicable BK and state exemption laws.  One thing that lawyer can discuss is the possibility of using value from the sale of the investment (if any) to pay down the first mortgage.  This might be a way to increase a state level homestead exemption. 

Put differently, it is possible under certain circumstances to pay down a mortgage up to the state homestead exemption (quite high in some states), rather than using the funds to pay unsecured creditors who would otherwise be discharged in a chapter 7.   If you can't monetize the interest and funnel it into a potentially exempt asset (homestead), then it likely gets listed in the BK schedules and the chapter 7 trustee will do the legwork to determine value.  But that value will be used to pay the unsecured creditors.

Also, steer clear of a lawyer (as opposed to a law firm) who tells you that he or she can handle both the BK and tort aspects of this case. Specialization counts.   

No legal advice here. Just advice to get legal advice.  With that horse thoroughly beaten, I will shut up.

[With This Herring]

What state you are in?

In the best case scenario she is:

A) Not responsible for any of the CC debt
B) Getting $100K

In this case she can pay off the second mortgage and part of the first. Then, she may be able to continue with the mortgage payments using SS. Getting any part of that $800K back would obviously be a huge boon but...as senior cash investors in a private business that money is probably gone.

Otherwise, contact a reputable bankruptcy attorney. Paying off mortgages with the $100K and then filing Chapter 7 to discharge the CC debt is likely the way to go. But, eligibility rules and means tests vary by state so contact an attorney!

No - typically she can go to every other investor and see if she can work out a deal - and tell them all she is going to sell her interest for whatever she can get.  If it is an ongoing interest - the rest of the investors will do what is right and buy her out.  If not - she can sell it to the highest bidder.

OldFirm would advise many of the small businesses with multiple owners who worked at or controlled the business to have life insurance on each owner for the value of their equity stake.  That way, if an owner passed, the company would be able to buy out the surviving spouse or heirs.  The provision was written into many partnership agreements.  If that private company has not been notified of the man's passing, telling them might spur action.  They may already have something in place to deal with buying his wife out, and that would let you relax a bit in that area.

[FrugalSaver]

I've also discovered an accidental death policy in the amount of $340,000.

I'm trying to get the details on the policy that are currently being looked for.

Anyone have any insights on whether or not a slip and fall death would be covered by this policy?  I'm looking for insights on how exactly "accidental death" is defined.

[Catbert]

"slip and fall" seems to be the literal definition of "accidental death".

spoken as a non-lawyer, non-insurance adjuster.

[FrugalSaver]

"slip and fall" seems to be the literal definition of "accidental death".

spoken as a non-lawyer, non-insurance adjuster.

That would be my opinion as well. I'm looking for the documents for the fine print.

Is it paid tax free in a lump sum?

[Mongoose]

I don't have any advice other than eventually offloading the house and definitely talk to a lawyer. I'm very sorry for their loss and the mess that was left behind. It's good you are trying to help and I hope this all gets sorted out so the widow has adequate support left.

[FrugalSaver]

I don't have any advice other than eventually offloading the house and definitely talk to a lawyer. I'm very sorry for their loss and the mess that was left behind. It's good you are trying to help and I hope this all gets sorted out so the widow has adequate support left.

Thank you for the thoughts and suggestions.

[FrugalSaver]

Still looking for the paperwork on the Accidental Death policy.  It appears it was about $6 / month for NEA (National Education Association) and was for a $390,000 policy.

I find it hard to believe that premium would pay that much for a death from a fall, but maybe so.  Maybe it was more limited than just a run of the mill accident.  Anyone with experience here have any perspective?

[FrugalSaver]

Still looking for the paperwork on the Accidental Death policy.  It appears it was about $6 / month for NEA (National Education Association) and was for a $390,000 policy.

I find it hard to believe that premium would pay that much for a death from a fall, but maybe so.  Maybe it was more limited than just a run of the mill accident.  Anyone with experience here have any perspective?

The policy is through Prudential.  They are closed today, but it appears the only way the Accidental Death / Dismemberment policy only pays if the death occurs in a vehicle or conveyance. 

I'll have to call tomorrow to confirm, but the way I'm reading it, an accident where one falls does not appear to be covered.