Submitted by Anonymous on Wed, 11/04/2009 - 12:39
Posted in
If I file a chapter 7 bankruptcy will I be able to keep the cash value of my life insurance policy. I've been paying in for a while and the current value is about $7,000 and naturally I don't want to lose it. Thank you.
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It is impossible to be sure
It is impossible to be sure with he limited facts I have here. However, the answer is mostly yes you can keep your entire interest in the life insurance. If you elect the federal exemption then you can exempt up to $10,755 under S522 (d)(8) and maybe more under §522(d)(7).
I would suggest talking to a bankruptcy attorney about all your assets and all the available exemptions. Most individuals that file bankruptcy keep everything they own. Warm wishes.
Attorney Robert Kovacs
Editor's Response
As attorney Kovacs suggests, the rules are different depending on whether you choose the federal exemptions or the Massachusetts exemptions, and you will have to discuss the different options with your attorney to determine which set of exemptions, as a whole, will work best for you.
If you choose the MA exemptions, under the following sections of Massachusetts General Laws Chapter 175, the following types of insurance and proceeds may be exempted:
Chapter 175, Section 119A: Life insurance proceeds, if the policy prohibits use to pay creditors;
Chapter 175, Section 125: Life or endowment policy, proceeds, dividends, interest, loan, cash, or surrender value;
Chapter 175, Section 126: Life insurance policy if beneficiary is a married woman;
Chapter 175, Section 132C: Group annuity policy or proceeds; and
Chapter 175, Section 135: Group life insurance policy.
Hope that helps. Follow this link for a more complete list of the Massachusetts bankruptcy exemptions.