Legal Question in Bankruptcy in Virginia

Life Insurance Proceeds

If an individual files for bankruptcy in the State of Virginia and has a term life insurance policy in place with a child rider, what happens if the child passes away and the debtor is the beneficiary of the policy? Does the proceeds have to go back into the bankruptcy proceedings for distribution to creditors?


Asked on 3/26/04, 1:01 pm

1 Answer from Attorneys
Richard S. Stolker Uptown Law, LLC

Re: Life Insurance Proceeds

In an ordinary Chapter 7 bankruptcy, assets available for payment to creditors include any money received by the debtor as an inheritance or insurance proceeds, resulting from the death of another person within 6 months after the bankruptcy case has been filed. A portion of the insurance proceeds may be exempt under the debtor's homestead exemption. Consult your bankruptcy attorney for the specifics.

Richard S. Stolker

301-294-9500

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Answered on 3/26/04, 2:15 pm


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