Indiana Bankrupcy and Death insurance payment

[No1UndrStars]

What is the name of your state? Indiana

A Friend of mine and her husband are filing for a payoff debt bankrupcy, A few months back their daughter was killed in an automobile accident. The amount of the Bankrupcy is $20,000.00 they are to recieve approximately $23,000.00 from their daughters death...although they do not know when they will be receiving this payment. My question for them is... When they receive the money from the accident, will they have to turn it over to cover their debt, or is this something they can put away or possibly pay off an older vehical not included in the bankrupcy? Any information is greatly appreciated, and I know they will be as thankfull for the help as I.

 

[Ladynred]

A lot depends on the nature of the insurance. The following are the exemptions for insurance benefits in IN:

Fraternal benefit society benefits 27-11-6-3 (IN Code reference)

Group life insurance policy 27-1-12-29

Life insurance policy; proceeds, cash value or avails if beneficiary is insured’s spouse or dependent 27-1-12-14

Life insurance proceeds if clause prohibits proceeds to used to pay beneficiary’s creditors 27-2-5-1

Mutual life or accident proceeds"


So, if the death benefits fit into any of these exemptions, they can probably keep it. If it does NOT fall into any of these categories, the Trustee is going to take it to pay their creditors.