The Additional Costs of Losing a Family Member while in Chapter 13 Bankruptcy

This year has been a tough one for my family.  This October, my husband’s wonderful, godly mother passed away.  We were overwhelmed with the outpouring of support of dear friends and family who paid tribute to her and offering a shoulder to my dear father-in-law.  They were married 50 years and have been certainly role models to my husband and me on what a godly marriage looks like.  My in-laws were prepared with having an Advance Health Care Directive, Wills, Life Insurance and had done their funeral planning.  During a time of such sorrow, having all of these in place was such a blessing to all of us.

Just this week, I had a former client who came in needing help with her finances.  She had just completed and had received a discharge in Chapter 13 this summer.  How could she have gotten into trouble in such a short time?  She had three family members pass away in a short time period.  None of them had life insurance or burial policies.  The costs of a funeral can unravel a perfectly balanced budget for anyone.

Burial Insurance

What exactly is burial insurance?  It is a policy designed to cover death-related costs for someone and comes in several varieties and sometimes is called “funeral insurance” or “final expense insurance”.  This type of insurance policy can be term life or whole life and are bought directly from an insurance company, not through a funeral home.  They generally cost less than pre-need insurance and will feature a beneficiary you name.  The risk will be if the named beneficiary doesn’t use the money as intended for the funeral expenses though.

Pre-need funeral insurance is usually offered by the funeral home.  It is often a whole life policy connected to an underlying insurance company that sometimes has the funeral home provider as the beneficiary.  You pay a monthly payment and upon your death, the funeral home provider takes care of the funeral.   The risk here is that if you move or need to use a different funeral home provider than the one named.

Dismissed for Failure

Many times a client’s Chapter 13 case is put in jeopardy of being dismissed for failure to make payments after losing a family member due to the increased, unexpected expenses of the funeral costs.  If you can limit the costs by planning ahead, you may help your loved ones with a small monthly payment by having a burial policy of some type in place.

If you have lost a loved one or had an unexpected expense that has left you in financial trouble along with your emotional roller coaster, please call one of our Bond & Botes offices to see if we can help.

Let us help you get a fresh start in 2016!

From our Bond & Botes family to yours, we wish you a Merry Christmas and a very Happy New Year.