QUESTION
How does my life insurance cash value affect my bankruptcy files?
Asked on Jul 15th, 2011 on Bankruptcy - California
More details to this question:
I am thinking about filing for chapter 13 in CA, about 180k in CC debt and 120k in HELOC, which is totally under water. However, my wife and i also have about 55k in universal life insurance (UVL). the cash / surrender value of the two policys combined is about 45k. And of the 45k, we can take a loan out for 80% of it. (so about 36,000 cash if we need) the uvl won't be "mature" until 2015 or so. Would this cash value prevent me from filing chapter 13? or make the payment higher? or should i just borrow the money out, pay the CC down and continue to pay as usual?
1 ANSWER
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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Cash value in life insurance policies are property of the bankruptcy estate. In a chapter 13 the debtor retains all assets. In a chapter 7 certain assets are liquidated by the trustee. There are exemptions that can be claimed to protect (keep) assets within a certain value. This is a complicated issue and a bankruptcy attorney should be consulted.
Answered on Jul 19th, 2011 at 10:09 AM