I just received a life insurance policy check and I am filing bankruptcy very soon. What are my options?

When an individual files for personal bankruptcy, the requirement for filing Chapter 13 is that you must make payments for a period of 3 to 5 years.  If you file for Chapter 7 bankruptcy, most of your unsecured debts are written off within 90 days of filing.  A likely candidate for Chapter 7 is someone that has no assets to lose, like a house or car and has no money left to pay off debts after paying basic monthly expenses.  If you have enough disposable income to pay off 25% of your unsecured debt over five years, you won’t qualify for a Chapter 7 bankruptcy.

If a debtor comes into money or property within 180 days or 6 months after filing, these assets automatically become part of the debtor’s estate and can be seized, liquidated and distributed to creditors.  Failure to report any monies received while in bankruptcy may constitute fraud.  This could result in not obtaining a discharge of your case. 

Determining if you will be able to keep the funds received from the life insurance policy depends on whether it is “exempt” from bankruptcy in the jurisdiction where you live.  You should contact an experienced bankruptcy attorney who can assist you with your specific case.

Talk to a Bankruptcy Lawyer to get advice and help plan for bankrutpcy so you can keep as much property as possible while getting rid of debt.