If a debtor passes away before his bankruptcy case is discharged, what happens next depends on whether he filed a Chapter 7 or Chapter 13 case.
Bankruptcy Rule 1016 provides,
Death or incompetency of the debtor shall not abate a liquidation case under chapter 7 of the Code. In such event the estate shall be administered and the case concluded in the same manner, so far as possible, as though the death or incompetency had not occurred. If a reorganization, family farmer’s debt adjustment, or individual’s debt adjustment case is pending under chapter 11, chapter 12, or chapter 13, the case may be dismissed; or if further administration is possible and in the best interest of the parties, the case may proceed and be concluded in the same manner, so far as possible, as though the death or incompetency had not occurred.
So, if the debtor filed a Chapter 7 case, the bankruptcy case will continue. A Chapter 13 case may be dismissed or may proceed, if possible and if in the best interest of the parties. The debtor’s estate will, of course, be involved during the remainder of the case. What that means is that if the bankruptcy is discharged, a debtor’s estate may be free of any debts as if the debtor had not passed away.