Life Insurance & Bankruptcy?

Question

If I was planning on filing for bankruptcy, then my uncle died and left me $70,000 in life insurance. That would not cover all of my debt as I was planning on including my house in the bankruptcy.

If I claim the life insurance it would all go to my creditors and i would still have to file for bankruptcy.

Can I legally deny the life insurance, have that ammount go to the other beneficiaries? and not have any penalties of any kind in the bankruptcy court

Answer 1

Talk to these guys, they are the best in the insurance sector and would surely advise you what could be done.

Answer 2

You cannot if you want the relief bankruptcy offers.

And besides, why would you want leave your creditors holding the bag? You owe the money right?

Answer 3

The key is he left YOU the $70k, not the creditors.  It is up to you to decide what to do with it.

Ideally, use it to pay off final expenses then fix your own credit problems.