We filed Chapter 13 in November of last year. My mother passed away April 30, eight days short of the six months from that time. I have heard that we have to turn any insurance money she leaves me back to the bankruptcy court. I should see money the first part of July.
Is this true? Is there any way I can protect this money?

?? Protect the money? Do you mean, is there a way you can cheat your debtors out of the money you owe them and defraud the court by hiding the money??

Is that properly what you are asking ?


By the rules of the bankruptcy court, any money you receive has to be reported. And used to pay the debts at a higher value on the non secured debts if possible.

Why is this wrong? How are you protecting the money by not paying people you really owe.

Bankruptcy laws are very complicated and your atty that filed the bankruptcy is the best source of advise. Surety he/she will answer your question. But it's my understanding that essentially, life insurance death benefits paid to a named beneficiary is proteced from the claims of creditos. If you filed bankruptcy, then you sought protection from creditors and I would think that life insurace death benefits would be protected also. My best guess is that you may be required to report it to the Court, but, again, ask your atty and, if you don't mind, let us all know the answer he/she gives to you.

Life insurance proceeds are paid directly to the benificiary if named, and are protected from debts of the deceased person, but it is income to the person who gets it, and has to be reported as money received to the bankruptcy court.

Once put into your bank account, it would be subject to being paid out, just as any money you would receive from any sourse. It has no speical protection for the person receiving it. Just from the estate where it is coming from.

You cannot claim something you have not recevied yet, once you receive the funds if you are still under bankruptcy than you will have to claim it. Check with a attorney .