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What about whole life insurance and bankruptcy?

Your Detroit bankruptcy attorney is always asked if a whole life insurance policy can protect you in the event of bankruptcy. A whole life insurance policy is a life insurance policy that has a cash value. It is generally more expensive than a normal term life insurance policy, but many people use a whole life insurance policy as a retirement tool.

As with any personal property and bankruptcy, whether the whole life insurance policy can be protected depends on the situation of each individual and the amount of personal property they own and its value.

If you file a Chapter 13, you can most likely protect the full value of the full value of life insurance. This is because, in Chapter 13, you are paying your creditors so that you can keep all of your assets, even those that exceed the exemption amount.

However, if you are in a Chapter 7, the question of whether or not you can keep them depends on many things. First of all, are you using federal exemptions or Michigan exemptions? You must choose a game and you cannot mix and match. Also, how much are your assets worth? House, car, bank accounts, stocks, bonds, personal items, etc. they all come into play here in deciding which outfit to wear. Be sure to speak with an attorney to find out which outfit would be beneficial to you before applying. Otherwise, you risk losing your assets.

The federal exemption, under 11 USC 522 (d) (8) (which is adjusted every three years) allows an exemption of $ 11,525.00 from the cash value. So if your cash value is only $ 10,000.00, then you can exempt your whole life insurance policy. Then your creditors or the Trustee cannot accept them. You can also deduct the loan amount you have against the cash value when determining the exemption amount. So if you have a cash value of $ 25,000.00, but you have a loan of $ 15,000.00 against you, then you only need to exempt $ 10,000.00. Are you sure.

The Michigan exemption is much more generous. Under Michigan exemptions, you can exempt the entire amount of the cash value. Sounds great? Well, remember that you have to choose between federal exemptions or state exemptions, you cannot choose. While the Michigan exemptions have larger grants than the federal ones, the federal ones have larger grants than the state ones.

It is important to speak with your Detroit bankruptcy attorney and discuss all of your assets and your values. Only then can I provide an analysis on which set would be beneficial to you and to protect what you own. You don’t want to try this on your own, because only an experienced bankruptcy attorney can protect what you worked so hard to achieve.

If you have a whole life insurance policy and need to get out of debt, call us today at (586) 439-4297, Extension 0and set up your free consultation. We will discuss your situation and decide whether federal or state exemptions would be best for you.

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