I’m filing personal bankruptcy, if I die can the bank take my life insurance money?
My business closed and I am basically forced into filing personal bankruptcy. If I die before I get the final discharge from the court can the bank claim part of the life insurance instead of my wife getting it all? My questions boils down to, do I need some extra insurance until the bankruptcy is final later this year?
It depends on whether you file a joint bankruptcy with your wife, or an individual bankruptcy without your wife.
If you file jointly, then the bankruptcy estate still exists even after the death of one spouse, so in that case it is possible that some life insurance proceeds paid to your wife might (in some circumstances go to pay creditors.
If you file separately, then no, the debts die with the debtor.
This entry was posted on Friday, July 3rd, 2009 at 4:03 am and is filed under personal bankruptcy. Follow the comments through the RSS 2.0 feed. You can post a comment, or leave a trackback.
Apparently your life insurance policy is protected, up to a certain amount, depending on the state you live in.
References :
http://www.insure.com/articles/lifeinsurance/bankruptcy.html
July 3rd, 2009 at 9:25 am
It depends on whether you file a joint bankruptcy with your wife, or an individual bankruptcy without your wife.
If you file jointly, then the bankruptcy estate still exists even after the death of one spouse, so in that case it is possible that some life insurance proceeds paid to your wife might (in some circumstances go to pay creditors.
If you file separately, then no, the debts die with the debtor.
References :
Former Legal Assistant with a bankruptcy law firm
July 3rd, 2009 at 9:54 am