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Roger
Roger, Attorney
Category: Bankruptcy Law
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Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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Should I continue to fund my life policy after Chapter 7? I

Resolved Question:

Should I continue to fund my life policy after Chapter 7?

I live in CA. I filed chapter 7 and was discahrged. My attorney somehow forgot to file an exemption for my life policy. One year later I had a Rule 2004 examination and the trustee asked me to provide information on life insurance. I provided them the information.

Due to stock market appreciation, the cash value went up to around $30,000. I took out $20,000 policy loan to pay for various things. About 2 months later, I received a letter asked me to go to court because they demand the $20,000 to pay back to the trustee. I received the letter on Friday and was able to borrow money from a friend to pay back on Tuesday.

My questions are:

Do I still have any ownership of the life policy after the trustee took the available cash value?

Should I continue to fund and keep this policy? (I like to keep this policy because I got it over 10 years ago and monthly payment is much lower than a new similar policy. On the other hand, it does not make sense to fund the account if the trustee continue to take away cash value in the future).

Thank you
Submitted: 11 months ago.
Category: Bankruptcy Law
Expert:  Roger replied 11 months ago.

Kirk Adams : Hi - that is for requesting me. I'll be glad to assist.
Kirk Adams : I've got to take a call and then I'll respond - probably 20 minutes. I hope that's ok.
Customer:

It is ok

Kirk Adams : Sorry for the delay.
Kirk Adams : There are some exemptions availble for life insurance under California law, which I'm sure were employed in the transaction, but here's a link that outlines those exemptions: http://www.thebankruptcysite.org/exemptions/california.html
Kirk Adams : As for how things work going forward, since chapter assets are determined as of the date of filing, so the cash value as of that day should be the only thing the trustee would be able to attach because any value accrued after the filing should not be considered an asset of the estate.
Kirk Adams : However, it would likely be bet to have your insurer issue a new policy to prevent any claims of the trustee to the new policy.
Customer:

THanks

Customer:

insurer issue a new policy - possible to do that?

Kirk Adams : That would be the safest thing to do.
Kirk Adams : Hi - I had the accept feature disabled so I could make sure your question was fully answered before you accepted the question.
Kirk Adams : I just received a notice that you attempted to rate/accept the question, but couldn't because of the feature being activated.
Kirk Adams : I have now enabled the accept feature, so you can rate my answer.
Kirk Adams : Sorry for any confusion, and thanks for allowing me to assist.
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26416
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
Roger and 3 other Bankruptcy Law Specialists are ready to help you
Expert:  Roger replied 11 months ago.
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