Life Insurance payments and automatic stay

[SweetGeorgia]

So we've been through our own Chapter 7 and I'm trying to get information together to evaluate whether bankruptcy might be an option for my mom.

The insurance payments are one of her biggest expenses. This is a complicated situation, but just assume that letting the policies die isn't an option at the moment. Later, maybe. She really does just need breathing room. It's not really a means test problem (I don't think) because her income is really low.

What happens to life insurance policies in Chapter 7? If the policy is lapsed BEFORE FILING (a little behind, but not final cancellation and could be cured by payment), can it be cancelled for non-payment during the stay period?

Or if the policy is current AT FILING but not paid during the stay period, can they lapse or cancel it?

Assume this is a term policy, but I'd be interested to know about whole life as well.

And what about DISABILITY insurance?

Any help at all (or pointers to further research I can pursue) would be REALLY helpful. Thank you all so much.

[Pandora]

Whole life insurance will be counted as an asset in filing from what we were told; we have term life, so didnt need to worry about that; we were allowed the expense for all of our polices.

Regarding cancellation or not - my understanding is things like life/health/auot insurance premiums do not count as "debts" because there isnt any collateral so to speak. If you fall behind the ins. agency can and will cancel the policies for non-payment. It will make it that much harder to reinstate because there will be a lapse in coverage, making all clauses effective again (most life policies have a 2 year clause for death).

Any way you can decrease the amount of the policy, making it more affordable for your mom?

[tcreegan]

Hi SweetGeorgia,

My thought was the policies of the insurance company...they probably have clauses for just about everything written in the agreement.

In a BK, they can't ask for money but you can voluntarily pay.

First avenue of research I think would be the terms of the policy.

Good luck with it,

Tom in Colo