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  1. #1
    Dontazemebro is offline Junior Member
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    Can creditors seize life insurance money?

    What is the name of your state (only U.S. law)? TEXAS

    In the State of Texas, can creditors take money out of my bank accout that i received as a beneficiary of my father's life insurance policy.

    If they can go after it, how can I go about protecting it?

    Thanks in advance.
  2. #2
    Betty is offline Senior Member
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    Are you talking about creditors of the deceased (your father) or your
    creditors (ie creditors who have a judgment against you for debts you owe)? Thanks.
  3. #3
    Dontazemebro is offline Junior Member
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    Yes, creditors I owe. Although I'm not sure if I have any judgements against me. How would I know?

    I know I have some debt and I don't have a bank account now, but when I receive the check. I plan on opening an account but I'm worried if creditors will be able to see this and attempt to seize my account.
  4. #4
    Betty is offline Senior Member
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    Life ins. proceeds of your father (the deceased) payable to the bene (you)
    named in the policy are exempt from seizure of your father's creditors.

    Your creditors are a little different story. You should have been informed if
    you have a judgment against you. You generally receive a summons to court
    first.
    These are the assets/income that are exempt from seizure in Texas by
    "general" creditors (example credit cards).

    100% of wages are exempt


    Real Property: Real property, unlimited value, up to one acre in town or city and 200 acres elsewhere (100 acre limit if unmarried) must file exemption with county, proceeds of sale are exempt for six months [41.002]

    Personal Property: Jewelry up to 25% of total exemption, 60 livestock, motor vehicle, pets, 120 poultry, tools, total of all personal property, life insurance cash value, and unpaid commissions up to $30,000 or up to $60,000 for head of family, athletic and sporting equipment, boat, books, bicycles, cattle (12), equipment, clothing, farming or ranching equipment, two firearms, food, heirlooms, home furnishings, two horses or donkeys and saddle, blanket and bridle for both, professionally prescribed health aids to 100 percent; any or all of the following to a total value of $60,000 for a family debtor ($30,000 for a non-family debtor) [42.001 and 42.002]

    Insurance / Annuities: Life, health, accident or annuity benefits, cash value, or proceeds (cannot exceed limit under personal property section above) [Insurance 21.22]; retired public school employees group insurance, unlimited amount [Insurance3.50-2(10)(a)]; Texas state employee uniform group insurance, unlimited amount [Insurance 3.50-2(10)(a)]; state college or university employee benefits, unlimited amount [Insurance 3.50-3(9)(a)]; benefits from fraternal society, unlimited amount [Insurance 10.28]; life insurance if beneficiary is debtor or debtor's dependent, unlimited amount [42.002(a)(12)]

    Pensions / Retirement Plans: County and district employees, unlimited amount [Government 811.005]; firefighters [6243e(5) and 6243e.1(104)]; judges, unlimited amount [Government 811.005]; municipal employees, unlimited amount [6243g and Government 811.005]; police officers, unlimited amount [6243d-1_17), 6243j(20), 6243g-1(23B)]; tax-deferred retirement benefits, unlimited amount [Property 42.0021]; state employees, unlimited amount [Government 811.005]; teachers, unlimited amount [Government 811.005]

    Public Benefits / Entitlements: Unemployment compensation, unlimited amount [522lb-13]; workers' compensation, unlimited amount [8308-4.07]; aid to families with dependent children [Human Resources 31.040]; medical assistance, unlimited amount [Human Resources 32.036]

    Wages: Earned but unpaid wages, unlimited amount [42.001(b)(1)]; unpaid commissions up to 75% with limits (see personal property section) [Property 42.001(d)]

    Miscellaneous: Business partnership property, unlimited amount [6132b-25]; amount of alimony needed for support [42.001(b)(3)]
  5. #5
    Dontazemebro is offline Junior Member
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    Thanks for your quick response Betty

    So if I'm reading this correctly

    life insurance if beneficiary is debtor or debtor's dependent, unlimited amount [42.002(a)(12)]
    This means that the money I receive as a beneficiary of my father's life insurance policy is exempt from seizure?

    Also by "general" creditors, what does this encompass? Does this include hospital bills and/or defaulted car loans?
    Last edited by Dontazemebro; 12-06-2010 at 11:05 AM.
  6. #6
    Betty is offline Senior Member
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    TEXAS:

    Life insurance: Policy proceeds and cash values wholly protected from all creditors (subject to disagreement among courts as to interpretation and interaction of statute).

    Annuities: Policy proceeds wholly exempt from all creditors.

    This is what the Tx. ins. code/statute says. There does seem to be some disagreement among courts though. You might contact an attorney in your area to see how the courts there handle life ins. proceeds.

    Re general creditors - they are most creditors (ie credit cards, personal loans, medical bills etc). Some exemptions generally don't apply in a few cases such as federal debts (ie back income taxes) & back child support.
  7. #7
    tranquility is offline Senior Member
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    Um...I think there is a misunderstanding. If the OP has to pay, he has to pay from all his assets. Including any life insurance benefits he received.
  8. #8
    Dontazemebro is offline Junior Member
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    Quote Originally Posted by tranquility View Post
    Um...I think there is a misunderstanding. If the OP has to pay, he has to pay from all his assets. Including any life insurance benefits he received.
    Could you further expound on this, as it seems to contradict the earlier statement.

    Furthermore, I checked with my local county clerk office and I don't have any judgments filed against me.
  9. #9
    tranquility is offline Senior Member
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    Aren't those references to the Bankruptcy code? Are you going bankrupt?
  10. #10
    Betty is offline Senior Member
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    Quote Originally Posted by tranquility View Post
    Um...I think there is a misunderstanding. If the OP has to pay, he has to pay from all his assets. Including any life insurance benefits he received.
    Pay for what - OP doesn't have to pay for father's debts. OP is talking
    about his own debts that is owed. Life ins. is exempt from most
    creditors though some disagreement among courts in Tx. The exemptions
    are bankruptcy & judgment exemptions. I was telling OP what is exempt
    if a creditor would get a judgment against OP.

    See Tx. life ins. statute above: Life insurance: Policy proceeds and cash values wholly protected from all creditors (subject to disagreement among courts as to interpretation and interaction of statute). Code/statute 21.22(This per my ref. applies to a judgment-judgment proof)

    OP might want to talk to an attorney in their area & see what they say about the life ins. proceeds.

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