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Bankruptcy and Insurance payouts

At the time a person went bankrupt she was only asked for the insurance policies she owned. What happens if she is a one of the beneficiary of the policy she does not own and there is an insurance payouts. Does the trustee have to know and what happens if not reported to the trustee

Posted from: Ontario

One Response to “Bankruptcy and Insurance payouts”

A licensed trustee said...

She is required to tell her trustee about any “windfalls” (unexpected money such as an insurance payout, an inheritance, a lottery winning). Her trustee will determine if there is anyway to make the windfall exempt, but in most cases it will be used to paydown (or payoff) the bankrupt’s debts.