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Insurance Cash-surrender

I am considering a consumer proposal for my $23000 of debt (more than half is a credit card debt).
I have virtually no assets (no car, house or anything ”sellable”) and I am single.
My parents pay an insurance policy on me that has a cash surrender value.
Can the creditors take that money even though I have never made a payment on the policy?

Posted from: New Brunswick

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One Response to “Insurance Cash-surrender”

A licensed trustee said...

You need to ask your parents who “owns” the policy – you or them. If they own it then it has nothing to do with your consumer proposal. If you own it – ie you can cash it out – then it may impact how much you have to offer your creditors in your proposal.

When you file a proposal you have to offer to repay the greater of: (1) what your creditors might receive if you filed for bankruptcy, and (2) an amount large enough to entice your creditors to agree to the deal – right now that means about 1/3 of what you owe.

So, find out who owns the life insurance policy and then call a trustee in your area to determine how much you have to offer your creditors in a proposal.