J. Walton
What would happen if a couple has fined for bankruptcy, male dies before legal discharge & now there is a life insurance benefit payable to the surviving spouse?? Does she keep the proceeds or are they seized as part of the bankruptcy process. Note she is a named beneficiary on the life file.
Posted from: Ontario
If the surviving spouse is still bankrupt then the insurance proceeds payable to the spouse will be seized by the trustee for the benefit of the surviving spouse’s creditors. If there are sufficeint funds to pay off the debt sin full then any remaining funds should be returned to the surviving spouse.
In cases like this, we generally ask the creditors to consider accepting a proposal that allows the survivin spouse to retain a portion of the funds. The creditors are under no obligation to accept the deal, but they have in every proposal we have offered. The surviving spouse should go and speka to their trustee about this as an option…