Changing situations: 2nd thread

[dtimo]

I am planning to file Ch 7 next week.

If my father dies I should receive an inheritance and money from a life insurance policy.
Is the life insurance treated the same way as the inheritance?

If this happens before my 341 and I make arrangements to pay off my creditors, is the bankruptcy still on my credit report?

[tcreegan]

Hi dtimo,

Calif treats life insurance proceeds slightly differently in System 1 and System 2...and I think you would want a CA lawyer to interpret "needed for support"

Assuming you inherit enough $$ to pay everyone, then the trustee should have your case dismissed. A dimissed BK comes off the credit report.

I hope your father is OK!

Tom in Colo

[dtimo]

Thanks.
He's oK except for being 93 with an anuerism.
Thanks for the clarification

[JSchrader]

Check out Bankruptcy Code section 541(a)(5)(C). I can't post a link, but you should be able to find it by searching google for "cornell 541(a)(5)(c) bankruptcy code." Basically, life insurance proceeds become property of the estate if you are entitled to receive them within 6 months of filing your case.

[tcreegan]

Hi all,

JS, you are from CA right? Life insurance proceeds are mentioned in both exemption systems, but they are worded differently. Know what is going on there?

Tom in Colo

[JSchrader]

Good point about California. In California there are two different exemption schemes.
Under scheme 1, you can exempt proceeds to the extent necessary for the support of the debtor. This is a pretty vague standard, and its very likely the trustee will attempt to claim that at least some of the proceeds aren't reasonably necessary for support.
Under scheme 2, proceeds received within 180 days of filing are not exempt (except by the wildcard exemption).

[tcreegan]

Thanks JS, that makes sense, exempt somewhat under System 1 where there is no wildcard, let the wildcard cover it in System 2

Tom in Colo