Does Life Insurance payout go to Trustee?

Funny, but our attorney is now paid off from our plan and I wonder why I can't get him/her to call me back or even reply to my emails? I get confirmation they recieved them, just not whether they even read them.

Does anyone know whether life insurance proceeds get paid to the beneficiary if they are in the middle of a post 2005 chapter 13? I know alot have asked whether they would get to keep the stimulus check or IRS tax rebate, but we did. We got $1200 for the stimulus check and $3500 back on our taxes. Our attorney said put them in the bank and only use them for business taxes or needed items. We've been in the plan for 18 mths. And the only thing we've received from our trustee since our confirmation is change of creditors. We own a small business. Is that unusual? Is just a matter of time before they start taking us apart bit by bit? It's getting harder to keep our head above water. If we wouldn't want to lose our business, we qualified for chapter 7. Life would've been so much easier if we had. Anyone out there with any comments. Hopefully encouraging ones. Thanks to everyone. My attorney gets mad at me everytime I mention googling and reading these forums, but I find it easier to believe others in the same boat as myself and you all have been helpful.

yeah isn't it interesting when they get paid you can never reach them! They are suppose to be available to you for the remainder of your chapter 13 or at least in my district they are suppose to but I have the same problem with mine as well. After numerous attempts to reach my about that stimulus check and since I did not get notified from the trustee to turn it in, I spent it. however I had to buy a brand new dryer and I had to get my central air conditioner fixed so I can prove that.

Any inheritances that I am suppose to get from my mother was left to someone else to put it in a trust because she doesn't want the trustee to have it.

Life insurance policies, we had to name them on the petition so they are aware of them...i don't know if you can keep it or not.......depending upon how much it is couldn't you afford to pay off your bankruptcy if you got that though.

My question is if you file joint and while half way through the plan your spouses dies......what happens to your chapter 13 plan??? can you continue to pay it or is it dismissed

Life insurance policies, we had to name them on the petition so they are aware of them...i don't know if you can keep it or not.......depending upon how much it is couldn't you afford to pay off your bankruptcy if you got that though. If the possibility of receiving a life insurance payout during your plan is known to the trustee, then chances are it's going to your trustee if it pays out during your plan. Check with your lawyer to make sure what's going to happen in your unique situation.

My question is if you file joint and while half way through the plan your spouses dies......what happens to your chapter 13 plan??? can you continue to pay it or is it dismissedTypically one of three things happens - (1) The Ch 13 plan is amended by removing the deceased spouse's financial figures (income, expenses, etc) from the confirmed plan and the monthly payment is recalculated to be paid by the remaining spouse for the remainder of the plan; (2) the surviving spouse converts to a Ch 7; or (3) if the surviving spouse is able, the Ch 13 plan claims may be able to be paid off 100% using the life insurance benefits. It all depends on the financial circumstances of the surviving spouse.

If the possibility of receiving a life insurance payout during your plan is known to the trustee, then chances are it's going to your trustee if it pays out during your plan. Check with your lawyer to make sure what's going to happen in your unique situation.

****This Lawyer never answers any of my questions...he's been paid and figures he doesn't have to answer it even though he's "suppose" to be my lawyer for the remainder of the bankruptcy plan.

Typically one of three things happens - (1) The Ch 13 plan is amended by removing the deceased spouse's financial figures (income, expenses, etc) from the confirmed plan and the monthly payment is recalculated to be paid by the remaining spouse for the remainder of the plan; (2) the surviving spouse converts to a Ch 7; or (3) if the surviving spouse is able, the Ch 13 plan claims may be able to be paid off 100% using the life insurance benefits. It all depends on the financial circumstances of the surviving spouse.


*****not all of our debts were joint, in fact the bulk are individual accounts in his name only and the huge bulk are in my name only.

If he should die, I would i be responsible to pay his share......and when your talking about paying off 100% using life insurance money, are you talking 100% of the confirmed plan or are you talking All the debt BEFORE bankruptcy at 100%

How is this even possible? Since when are life insurance proceeds the property (or income) of the deceased debtor? Life insurance is a transaction between the insurance company and the beneficiary, or becomes one upon the death of the debtor - regardless of how the premiums were paid.

Oh well....if I die before my Chapter 13 plan is finished and my kids don't receive their shares of the life insurance proceeds, I don't think I will be shaking my fist at the trustee from my grave.

The main reason we wanted life insurance was to pay off the house in the effect of a spouse's death; there would not be much left over when that is done.(the house is paid outside the plan). Would our attorney know the process for this in this district, or is it one of those "fluid" things? I would not be appy if the amount went to the unsecureds first!!

11 USC § 541(a)(5):

(5) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date--

(A) by bequest, devise, or inheritance;

(B) as a result of a property settlement agreement with the debtor’s spouse, or of an interlocutory or final divorce decree; or

(C) as a beneficiary of a life insurance policy or of a death benefit plan.


If it happens 181 days past your filing date its yours.

"Filing Date" correct, NOT date of confirmation...so we filed on 12/19/06 and confirmed in 6/07 so we should be fine...that means if i should kick off my husband will be ok.

Any ideas if he would be able to continue the plan or pay it off with life insurance proceeds?

I believe that the above-mentioned portion of 11 USC 541(a)(5)(C) points to the debtor as the beneficiary - not to the debtor's beneficiary.

So - if a debtor becomes a death benefit beneficiary, then yes, the trustee can confiscate the money. If a debtor dies and has life insurance, ain't no way the trustee can get hands on the death benefit.

well if the debtor dies and has life insurance leaving it to a spouse who receives and is under chapter 13, then what????? if I'm dead and i filed and he is alive and filed and he has his own debts and i have my own debts.......then what.....what happens to the bankruptcy?

I know this is a little off track of this thread but, check out this chapter 7 case in my district. This couple found a way to get around the trustee when one of them passed away right after filing:
http://www.nceb.uscourts.gov:8080/search/fetch?url=file%3A%2F%2Flocalhost%2FC%3A%2FWrittenO pinions%2FNCEB.8.8.bk.123.6767061.0.pdf&index=Written+Opinions&space=12048339557340054964311418&type=application%2Fpdf&charset=

11 USC § 541(a)(5):

(5) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date--

(A) by bequest, devise, or inheritance;

(B) as a result of a property settlement agreement with the debtor’s spouse, or of an interlocutory or final divorce decree; or

(C) as a beneficiary of a life insurance policy or of a death benefit plan.


If it happens 181 days past your filing date its yours.

I've been getting some mixed signals about this. My understanding is that each state has it's own laws regarding whether the trustee is entitle to insurance payouts, and amounts thereof. I was told that in the state of TX, life insurance payouts to debtor were protected. Am I off on this?

First, newbeginning, it's against our forum rules to post to old, outdated threads like this one - it's been inactive for nine months, an eternity in the bk case law world. In the future, please start a new thread to ask a question like this - thanks.

I was told that in the state of TX, life insurance payouts to debtor were protected. Am I off on this? Here you go - straight from a Texas bk lawyer's website at http://www.dallas-bankruptcy.com/bankruptcy_exemptions.htm which states this about the exemption of insurance benefits in Texas when you file bankruptcy:

"Insurance benefits: There is an unlimited exemption of insurance benefits to the debtor who is the designated beneficiary of an insurance policy. Tex.Ins. Code art. 21.22; In re Young, 166 B.R. 854, 857 (Bankr.E.D.Tex.1994) (life insurance proceeds remain exempt cash).: "Insurance benefits" includes "all money or benefits of any kind, including policy proceeds and cash values, to be paid or rendered to the insured or any beneficiary under any policy of insurance issued by a life, health or accident insurance company, including mutual and fraternal insurance companies, or under any plan or program of annuities and benefits in use by any employer." Tex.Ins. Code art. 21.22 § 1.: The exemption protects the insurance benefits from seizure to pay the debts of the beneficiary and the insured even if (i) the insured has the right to change the beneficiary or (ii) the insured or the insured's estate is a contingent beneficiary. Tex.Ins. Code art. 21.22.: This exemption does not apply to a creditor seeking to:(1) recover premium payments made in fraud of creditors; or (2) to foreclose on its security interest in a policy or its proceeds pledged to secure the debt of the insured or beneficiary. Tex.Ins. Code art. 21.22. If the bankruptcy debtor chooses the Texas exemptions, insurance benefits are fully exempt in a bankruptcy proceeding of either the insured or the beneficiary. Tex.Ins. Code art. 21.22, § 1(4)."

So the short answer to your question is yes, insurance benefits are completely protected from trustee seizure in Texas. However, this is not the case in all states.

Nevermind

My apologies. Perhaps there could be an automated message at the bottom of old threads indicating that it is no longer active.

Thank you.

Or better still, maybe they can be locked so that no one can post, but will be able to read them....just a thought.