Loan Included in Bankruptcy is Shown as Open with Interest Accruing

[Optimistic09]

We had a loan against a life insurance policy included in our bankruptcy. Today we received a bill from same insurance company showing a policy loan balance with interest due.
We were assuming the loan was discharged so why would we have a balance with interest accruing?

[SMinGA]

Just a guess - but wouldn't this be a secured debt? Meaning you lose the insurance value or you keep paying the loan? What has happened with the insurance policy/value?

[Optimistic09]

Yes now I think it is because it is a secured debt. We were not quite clear how it would play out in our bankruptcy but now I think we know.

The policy was taken out in 1982 and is in effect although we just made changes to it. We had riders removed on it that weren't serving us well and were causing the premiums to keep going up. (We have become better decision makers!)

It has a cash value that is a little bit more than the loan. I imagine we keep paying the interest until the loan is paid off or if we cancel the policy then the loan would be paid by the cash value.

In hindsight we are bummed. At one point a couple of years ago before we ever imagined bankruptcy we paid on some credit cards with inheritance money to reduce our debt. Our thinking was that this loan was the lesser burden than the credit card debt. Not so when you file bankruptcy. We could have had it paid off.
Thank you.