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    Life insurance exempt

    I live in Georgia and am considering chapter 7,my wife and I have a stright life insurance policy with a cash value of about $9000.00 .Would we lose this if we go brankrupt ?

    #2
    I live in British Columbia and have the same question. Although the laws are different in Canadian provinces, I think that the concepts underlying the law is very similar to those in many US states. I asked my Life Insurance agent the question and received some case law which suggests that in BC, insurance policies that were initiated within the last year (and within the last 5 years in some cases) could be seized by the trustee because of the possibility that the policy was created to avoid loss on bankruptcy. The policies on me and my wife were created more than 10 years ago so this is not an issue in my case. The agent's understanding is that the seizing of my policy would potentially harm the beneficiary (my wife) and therefore is not eligible to be seized. Withdrawls from the cash surrender value of the policy are loans from the policy and I do not yet know whether withdrawls will be treated as income or not. My agent has written to the insurance company for clarification, and after two weeks, insurance company has agreed to accept a request for the information from a client (they are required to respond to a trustee), so we have now sent them the questions again. I'll post the Insurance company's response here when I get it.

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      #3
      According to http://www.bankruptcyinformation.com/ga_exemp.htm the most that will be exempt is $2,000 and it depends on who the beneficiary is. So, either the policy would be liquidated or you would have to pay the trustee $7,000 to keep it. If you don't use the $5,000 homestead exemption, you could apply that to the insurance too.

      DMS, I wouldn't rely on an insurance company or insurance agent to give you advice on bankruptcy exemptions.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

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