Due to medical urgency we had to move out of state and leave home of 23 years. Tried to sell for 9 months. Could not afford rent of current housing and old mortgage. Living on husband's SS disability. Forclosure sale due the end of Oct. Bank will come looking for the remainder of the mortgage and we will be forced to file bankruptcy. Husband is now near death and I'm wondering how his life insurance will figure in a bankruptcy. How can I protect the life insurance money from the bank? I will very much need that money to pay for the funeral, living expenses until I am able to provide a livable income, buy a dependable car, possible schooling costs, etc.
1 Answer from Attorneys
In Alaska, you would not normally have a mortgage, but instead a deed of trust. In any case, it depends on how it is written and who financed it whether the bank can seek a deficiency judgment. In any case, if the bank sues you for a deficiency judgment, they will have to enforce that judgment by obtaining a writ of execution siezing your non-exempt assets. Did both you and your husband sign the deed of trust (mortgage) note?
Are you named as the beneficiary on his life insurance? You would collect the insurance proceeds directly, not through your husband's estate. If you spend the proceeds before the bank obtains a judgment against you, there is nothing the bank could do (it would already be spent). As far as what's left over is concerned, you might be able to convert that to something that would be exempt. I suggest you talk to the life insurance company while your husband is still alive about doing that.
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