Advice please

[kjrmom911]

Hi everyone, I have been absent for awhile.

A lot going on in my life. We are halfway (more than halfway) through a chapter 13 bankruptcy (stripped lien and caught up on back taxes).

Unfortunately, the bankruptcy was the straw that broke our marriage. We have been living apart for last 6 months and are going to be filing for a divorce.

Here are my two questions,
#1 since we are divorcing we will need to cash in our whole life insurance policy. It was exempt from the bankruptcy, but if we cash it in are we going to be in trouble? Asked the attorney and he said no, its like a savings account and we are allowed to cash it in.

Any thoughts?

#2The other issue is this, since we are divorcing can we keep the bankruptcy as is?

We are in agreement on everything and although it will be tight we can pay the payment.

Any advice is greatly appreciated.

[LadyInTheRed]

#1 - Trust your attorney's advice.

#2 - Talk to your attorney about your options, one of which is to continue making the current plan payments. But, now that you will have separate households, your expenses have presumably increased and you may be able to modify your or bifurcate your plan and lower your payments.

I'm sorry your marriage didn't withstand the finanical difficulties, but am glad that you are working together on the separation so that your BK isn't jeoapardized.

[kjrmom911]

Hi Lady,
Thank you for your response. I guess we will trust the attorney. It is just scary. No way to lower the plan payments as we are paying back taxes, the lawyer, and that is it. It is as low as it can go. We will be ok with the payment, 1 year and 5 months left to go. I was just worried that if we cashed in the life insurance policy it would be something the trustee would want.