[CLBS] Life insurance proceeds

[Randal French]

You should be able to pay to fix the engine in the car, and make sure the payment clears the bank.  Then contribute remaining funds to a retirement account for each debtor.  I would wait as long as possible after all transfers clear, at least 3 to 6 months if possible without too much stress, and all transfers must clear first or the trustee takes the funds that are in the bank account at the moment of filing because the transfers do not clear.  But, if you have no choice, you do not have to wait that long.  You just have to make sure all transfers cleared the bank account and were in the retirement accounts or in the auto repair persons hands before you file.  No uncleared checks, no pending electronic transfers.

An alternative is to use the life insurance proceeds to pay living expenses until the life insurance proceeds are gone, from a different bank account from the account to which the debtor's paychecks are deposited.  Save and hold the paychecks, because you can exempt 75% of the paychecks. Debtors will lose 25% of the funds on hand going this way, but keep 75%.  Spend the life insurance proceeds for normal reasonable living expenses.  Have the records to show that the bank account that has funds on hand has received only the paychecks and none of the life insurance proceeds.

Good luck.

Randy French


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-----Original Message-----
From: CLBS [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Patricia Evans
Sent: Sunday, June 02, 2019 2:36 PM
To: Bankruptcy list
Subject: [CLBS] Life insurance proceeds

I have clients that we were getting ready to file. He is on disability and she on workers comp. His mother just died leaving him a $15,000.00 life insurance policy. It won't make much of a dent in their debts. Plus to top off their bad luck their only car blew the engine yesterday. I really don't see where it can be exempted out. Any ideas and how long should I wait to file?



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