Legal Question in Wills and Trusts in Illinois

Generally, your life insurance is exempt from attachment for the benefit of creditors (to the extent it is payable to a spouse or dependents). So, provided you pay any premiums that may be due, you likely are not at risk with the insurance.

Your question suggests that you should be considering bankruptcy. Likely, there will be a judgment against you for any shortfall the lender is left after its sale of your home. Likewise, if you lost your home, I imagine there are other bills adding to your financial concerns. Even if you have filed bankruptcy in the past, there may be options.

The scope of this space does not afford an opportunity to assess the situation and advise you. I recommend you assemble for legal consultation: (1) your income information for June 2012 through the present, including wages and unemployment during that period; (2) all your bills (copies neatly assembled, back pages included); (3) last four years� tax returns; (4) a credit report (use www.annualcreditreport.com to obtain free report if not requested in last year); and (5) other information that may apply, such as copies of lawsuits. Call at your earliest convenience to afford the most opportunity in which to be advised about your best course. You are not required to use an attorney in your area.

I do not recommend filing bankruptcy on your own. There are too many complex issues. I have seen several posts on this site for debtors who filed on their own and are seeking counsel concerning complications. Most of them will have a hard time finding an attorney to get involved to unwind the mess without the attorney charging several times what would originally have been paid.

Keep up the premiums. In the event of the death of the insured, the beneficiary will have cash and the beneficiary's creditors will be in a position to compel the payment of their debt. Only a bankruptcy or a global settlement with all the beneficiary's creditors will ensure in the event of the insured's death that the proceeds will be available.