Expert: Mark J. Markus- California Bankruptcy Attorney - 12/29/2005

Question
Can you Please give me your impute, not legal advice, regarding the following:

Say a person filed a chapter 13, in July of this year, (prior to new laws)and the bankruptcy is still open, and set up to repay creditors a portion of debts over 4-years. And now just learned that you are a beneficiary on a life insurance policy on a relative that just passed away, "DOES THE LIFE INSURANCE MONEY GO INTO THE BANKRUPTCY, OR IS THAT SOMETHING THAT IS OR CAN BE EXCLUDED FROM GOING INTO THE BANKRUPTCY"?

Sincerely, John

Answer
that really depends on how the courts and trustees in your jurisdiction handle such things.  Technically, the life insurance proceeds are part of the bankruptcy estate.  Whether you have to increase your plan payments or not because of it depends on what exemptions you have avaialble, what percentage you're paying to your creditors now, and the liquidation analysis with the new asset.  Some jurisdictions take the position that the plan is fixed as of the date the plan is confirmed, but you need to check with your attorney on how yours handles it.