Life Insurance and Creditors New Mexico NM
Reader’s Question:
I am a businessman here in New Mexico, and I recently filed for Chapter 11. I am wondering if my paid-up whole life insurance, which has accumulated cash value and dividends, will be subject to priority claims by my creditors?
Rodney
Rio Rancho, NM
Rodney, a brief thing about Chapter 11– it is there to be filed to give people in financial trouble like you a fresh start. You may be given complete or partial relief for most of your debts. Even though you filed for Chapter 11, it doesn’t mean that you don’t have to pay for your debts and other financial obligations anymore. Rodney, the good news is, your business will still be in control, and it’s still viable to run your business, but from then on, you will be subject to look-ins by the court. So, if it turns out that you have more debts than assets, then your creditors will try to squeeze out any asset or cash they can from you. Remember, you are not absolved from your debts, and that Chapter 11 simply allows you to reorganize, so you can pay everyone whenever you are able to in the future.
For your life insurance policy, well, I don’t think the creditors will be interested in that because your policy has an intended beneficiary. So, if anything happens to you, death benefits go to the beneficiary, who doesn’t owe anything to your creditors.
Rodney, I hope you can straighten this out. Should you want a good lawyer in New Mexico, send me your e-mail and I will send you some contact numbers.
Tags: life insurance, life insurance beneficiary, life insurance claims
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