Bankruptcy & Insurance policies

Bankruptcy & Insurance policies

What if two weeks before signing the assignment for bankruptcy I receive a payout from an insurance policy from my father’s death that is not tax deductible.

Posted from: Saskatchewan

One Response to “Bankruptcy & Insurance policies”

Jillian Taylor-Mancusi, Trustee | B.A. | C.I.R.P said...

When you file an assignment in bankruptcy you sign over to the trustee for the general benefit of the creditors everything that you own have a right to or an interest in with the exception of any assets that qualify for a provincial or federal exemption. As at the date of your assignment in bankruptcy the proceeds from the insurance policy, from which you are a beneficiary are an asset of your estate and as such vets in the trustee. They are not covered under any federal or provincial legislation that would allow these funds to be claimed as an exemption. If the funds are substantial enough to warrant a review of your financial situation you may be able to annul your assignment in bankruptcy or perhaps file a consumer proposal to your creditors. In any event you should be discussing this with your trustee who can help you select the option that is in your best interest.