Can a life insurance annuity be protected when filing bankruptcy?
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Can a life insurance annuity be protected when filing bankruptcy?
My 81 year old father is considering bankruptcy. His wife recently passed away and he has been left with many debts. He is retired and collects approximately $800 per mo in social security. This is his only income. He just received an $8,000 annuity check from a life insurance policy he and his wife had. It is a one-time check.. Is there a chance he could lose this check if he files for bankruptcy? His income from social security puts him below the poverty line. He has a home mortgage and one vehicle. No other assets to speak of.
Asked on April 27, 2012 under Bankruptcy Law, Colorado
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If your father is considering filing for bankruptcy protection he is required under federal bankruptcy laws to declare all assets and liabilities with respect to the petition including his life insurance policy.
However, depending upon what type of bankruptcy petition that he files (Chapter 7 for example) his life insurance annuity proceeds might not be subject to payment to creditors. I suggest that he consult further with a bankruptcy attorney concerning his assets and liabilities to ascertain whether a bankruptcy filing will be to his benefit and if so, what type of a bankruptcy filing, liquidation or reorganization.
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