I have borrowed in the past on my cash value of my life insurance. How is this debt treated? NY Life charges me interest on the cash value loan. Is this bankrupted in Chapter 7? How does it affect my policy? Any thoughts appreciated.
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Only a thought. If you do not pay the loan back, and croak, they will deduct your debt from the payoff. This is my understanding but I would not sware to it. 'HubIf I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010. -
Money you borrow from yourself is not discharged in BK. You will still have to pay that many back after your BK is complete.Comment
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Will the insurance company actually report to the credit bureau a failure to repay?Comment
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I doubt that the insurance company will report to the credit bureau, most don't.
The balance you owe in repayment would be deducted from the premium when paid out to beneficiary.
Its best to "catch them back up" as soon as you can....Minny
"It's amazing the paths that our feet sometimes follow in life".
My suggestions are from "personal experience" and research only. Do not consider this as legal advice. Each bankruptcy case is different.Comment
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Yes, one of the attorneys that I have spoken to said that this is not "true debt".
I do believe it will survive the bk. Oh well.Comment
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When I filed the trustee wanted to know about my life insurance policies, and the way I understood it was that term policies were ok, and I could include my monthly payment to them in my expenses, but if I had a whole life policy, they would take the cash value of it from me, so maybe best that you used the money yourself instead of just handing it over to the trustee if it had still been in the account. My husband used to sell insurance for a living many moons ago, and won't buy whole life insurance, only term, because he says it's a terrible investment vehicle, so maybe you want to make up for what you've borrowed in the whole life policy with a term policy? Just a thought.Filed CH 13 September 17, 2007
Plan Modified July 8, 2009 from $1100/month to $400/month due to change in income, finally discharged in July of 2013!Comment
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We also have a whole life on my husband with a cash value at this time of $1700. Policy is for 50,000. We pay 313.00 quarterly.
Do you think the trustee will make us take the cash value & turn it over to them? We plan to file a 13 in a couple of months.
We are in Arizona. Due to husbands health issues & age we are not able to get any other life insurance due to cost.Comment
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