Insurance policy loan

[glc4122]

yes i have a life insurance policy that has dividends and was going to take a loan on this policy to pay for attorney fee's and purchase another car for work, ( my car is dead) is this going to make a problem when i file bk, chapter 7 hopefully ?

[lrprn]

yes i have a life insurance policy that has dividends and was going to take a loan on this policy to pay for attorney fee's and purchase another car for work, ( my car is dead) is this going to make a problem when i file bk, chapter 7 hopefully ?

Depends on how much the loan will be for and how close it falls to your filing. Also depends on whether the loan will be secured and if you intend to reaffirm it or not.

[glc4122]

yes the policy has a feature, that loan doesn't have to be paid back,it will reduce my death benefits. and i expect to file in approx 2 months.

[lrprn]

yes the policy has a feature, that loan doesn't have to be paid back,it will reduce my death benefits. and i expect to file in approx 2 months.

Doing this is going to increase your income for the Means Test by whatever you take out. Could adding this "not-a-loan" to your regular income going to put you over the median income for your state and family size? (That would mean you probably can't file Ch 7.)