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Life Insurance Received after Discharge from Bankruptcy

After filing for bankruptcy in Canada in Dec/04 my spouse passed away in May/05. I was discharged from bankruptcy Sept/05 and received a life insurance payment in Nov/05. The trustee is now contacting me and they want the money. Do I have to repay it?

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One Response to “Life Insurance Received after Discharge from Bankruptcy”

A licensed trustee said...

This is a difficult question. In general, any property you acquire while bankrupt, unless it is exempt, becomes property of the trustee. Since it appears you became entitled to the life insurance proceeds while bankrupt, it is possible that the trustee has a right to these proceeds. However, the law is different across Canada, and there may be other factors to consider (such as did you use some of the proceeds for funeral expenses?). Since this is a complicate area, I would suggest you consult with a bankruptcy lawyer for more advice.