Chapter 7 & Life Insurance Assignment

[LAA17]

My business Chapter 7 was discharged approximatley 19 months ago. In the all of the following chaos I just remembered that my life insurance policy had been assigned to the bank as collateral for my SBA loan. (What a goof I was not to have thought of this sooner. ) Anyway, I called the insurance company today and was told I would have to contact the bank and have them send a letter noting there was no longer a loan to provide collataral for. However, after doing some reading I'm concerned that the bank may want to continue to hold the policy, or, if they did release it back to me they would bill me for the premiums. There was cash value in the policy, so I'm thinking that may have been making the payments. Lots of "I don't knows" here.

I will be calling the insurance company again to see just how the premiums were being paid. After that I guess I will contact my attorney.

Anyone out there with any info or experience with life insurance policies and business bankruptcy???? I would be grateful for your response.

[AngelinaCatHub]

First of all, life insurance is not attachable and the fund in the event you pass, would go to your beneficiary. Since you have been discharged, I am not sure you had a secured debt or not, however, the cash value they cannot get unless you release it. Again you have heard this, I am not a lawyer. Yes you need to get one on this. Was a contract signed and what did it say? That would be the issue. 'Hub

[LAA17]

Thank you for your reply. I have contacted my attorney and the bank that the policy was assigned to. I'll report back with the outcome.

[LAA17]

Update. I contacted my attorney and he told me to ask the bank to release it, but that he doubted they would. He was right. They wouldn't release the policy back to me. So, the cash value continues to pay the premium. I have done nothing else for the past several months, but was digging through old paperwork recently that brought it all back to mind again. I still can't see the right in them hanging on to my policy. If they are not entitled to the cash value, and my beneficiary would be the one to collect, then I can't see what their point in holding it is. If I was paying the monthly premiums out of my own pocket, which would be really dumb, then it would seem like I should send them a bill.

I have since obtained a new policy through my employer, but darn it all, I would really like to have had the cash value that I earned over the 25 years I've had the policy. This really irks me.

Any comments or ideas are more than welcome.

Thanks.