Insurance Claim Payment Questions

[Dollar Bill]

I am interested in knowing if an insurance claim payment need to be calculated in my C7 as income. I have not filed yet and will receive the check from a stolen vehicle by the next few days. Will it count as income?

Also......how in the world would a trustee know that I ever received this ins. claims payment. Is it searchable in some system? I'm not syaing that I will not disclose of it...just curious. I know that the trustee will find the transfer from me to the ins. and ask what it was about and if I received a claim payment. If I said no can he find out? (I will not do it because it could risk my being discharged) Just wondering.

[MomIcantFindmy]

Yes insurance claims are surchable. Personally, I would just hang onto the check and not even cash it. That way it is available if the trustee asks about it or wants it. Talk to your attorney about that one. How much is the check? Is there a lein assosicated with the vehicle that was stolen?

[lrprn]

Some states have exemptions that protect insurance claims up to a certain $$ level. Is yours one of them?

As far as whether the insurance claim will count as income, that answer depends on if the claim arrives before or after filing, what you plan to do with the money, and how your local court is interpreting "income" for the Means Test.

If the claim arrives before you file and you intend to turn the amount you receive fully back into another car before you file, then the answer is likely no - it won't count as income. However, if you choose to use a portion to pay bills and living expenses, then a case can be made that whatever isn't turned back into repurchasing a car is income and should be counted as such.

If you know the insurance claim money is coming before you file but it doesn't arrive until after you file, then as I recall there have been rare cases where a few trustees have laid claim to the money, even though without it the filer couldn't replace their car.

You need expert legal advice from someone who is familiar with how this situation has been playing out with your local court's trustees since 2005. Unfortunately there's no quick, easy answer - it's tricky.

[Dollar Bill]

Thanks for the input from both of you.

The check came and I deposited it yesterday. Needed the money because my disabilioty payments (which are exempt) are still hung up in the system.

I have a full 22k wildcard to use, but I want to spare it for things like tiny 5k and 9k equity in two rental properties. Just in case. The ins. check is for 8k. I have not purchased another car.

I guess I should, spend the money from the ins. as if they were my disability checks. Once disability comes in I can place that money in a separate savings and claim it to be expempt. Never spent but exempt funds.

I wonder what the trustee will have to say about that. What do you think?

[Flamingo]

It appears there was no balance due on the stolen vehicle and the insurance check you received was for the value of the stolen vehicle. Make sure you keep track of whatever you are doing as to that occurence and whatever is going on as to your disability checks because I certainly would disclose all to the attorney you retain for your BK. Make sure you disclose all because, to answer your question, no one knows what the trustee would have to say about it. It's all searchable so inform your attorney.

[Dollar Bill]

Oh absolutely...thanks Flamingo!