Types of Personal Bankruptcy

• A Chapter 13 repayment plan orders a debtor to pay a set amount over a three to five year term. A Chapter 7 plan liquidates your estate by selling assets to pay creditors.
  
  

Filing for Bankruptcy

• When you file for bankruptcy, your estate comes under control of the bankruptcy court through a trustee that oversees your bankruptcy.
  
  

What is Life Insurance?

• Life insurance is usually taken out to insure the life of someone in your household. If something were to happen to that person, the life insurance company would pay out a set amount of money to the beneficiary.
  
  

After Death

• If you are the beneficiary of a life insurance policy that is paid out while you are in bankruptcy, that money becomes property of your estate.
  
  

Buying While in Bankruptcy

• If you think you need to purchase life insurance while in bankruptcy, you will need to provide documentation to the trustee with estimates of the cost and any benefits you wish to receive. If the trustee deems your request reasonable, he will approve your purchase of life insurance.