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gwn

While I am undischarged, if my spouse passes away is the life insurance, to which I am sole beneficiary, subject to dispursement by the trustee?

Posted from: Ontario

One Response to “gwn”

A licensed trustee said...

Yes – if you receive an insurance payout on your wife (or any other person’s) life insurance while you are an undischarged bankrupt the proceeds are payable to your trustee for the benefit of your unsecured creditors.

The same applies if you inherit money or win the lottery – thes are all considered windfalls and your trustee has a legal obligation to seize enough of the funds to pay-off your debts. If there is money left over it will be returned to you and you may apply to the Court to have your bankruptcy removed from your record.