Life insurance proceeds during 13?

[Ifonly]

What happens if (God forbid) something happens to either my husband or I during the 13? Does the trustee take the life insurance proceeds and pay back all of the unsecured debt? Should I change the beneficiaries?

[Flamingo]

The odds of something occurring to you or your husband during your Plan are high unless you are way up in years or have health matters that could become serious. My hubby and I did not change any beneficiary information during our Plan years. However, trustees are very interested in inheritances and if one of you inherits during your plan years from any source, you need to consult with your attorney. Yes they can take all or a portion of any inheritance or proceeds. We went through it with the passing of my father-in-law and funds left to my husband.

[lrprn]

What happens if (God forbid) something happens to either my husband or I during the 13? Does the trustee take the life insurance proceeds and pay back all of the unsecured debt? Should I change the beneficiaries?

If a spouse dies or becomes incapacitated during a Chapter 13 bankruptcy, the court will determine whether the repayment plan can be completed without the deceased spouse, even if it means with less money. If the court determines the remaining spouse alone has enough disposable income to continue the plan, it will be amended accordingly and continue.

If the bankruptcy court determines that the plan cannot be completed without the deceased spouse, it may be converted to a Chapter 7 bankruptcy and discharged.