Legal Question in Bankruptcy in Pennsylvania

Re: Can debtor keep life insurance proceeds

You only have an exemption of approximately $9,200.00 in cash. Therefore, most of your savings would be at risk as would the life insurance proceeds if received within 180 days of filing.

Assuming your husband lives for a long time (and that is certainly my hope) you would simply lose some of your savings and all of your debt.

Then, assuming it has been more than 6 months since filing, the proceeds will be yours.

I trust this answers your questions, but feel free to call or E-mail for a free intial consult.

Re: Can debtor keep life insurance proceeds

Section 522(d)(11)(C) of the U.S. Bankruptcy Code provides an exemption for "a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual's death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor."

There is case law from bankruptcy court in Pennsylvania that supports exempting the insurance proceeds from assets made available to creditors. It is legally safer, of course, to file the bankruptcy while your husband is alive.

You do not state whether you own a home with equity. If not, up to $17,450 of the $20,000 savings can be exempted if the savings are in joint names and you file a joint bankruptcy petition while your husband is alive.

The exemption requirements are somewhat complicated and this is general information for discussion purposes, not legal advice. Please feel free to contact me if you want to discuss forming an attorney-client relationship.