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Do I Have to Use Life Insurance Money to Pay Off Credit Card Debt? – Susan

Do I have to use the life insurance policy money to pay off credit card debt

My husband died and left me with $25,000 in credit card He also left me a life insurance policy in the amount of $55,000. I want to file bankruptcy as I don’t make enough working to pay off the credit card debt. Will I be able to keep the money from his life insurance policy or will I have to pay the credit card debt off using that money?

Susan




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Steve

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

5 Comments

  • It is definitely dependent on the rules of the state you are in. It is best to see an attorney in this case.

  • Note: the life insurance money is not part of the proceeds of the estate, unless he designated his estate as the beneficiary. If you are the beneficiary, then you get the money. It is possible that you may not have to pay the debt, and you can keep the money. But it depends on a number of factors, so talk to an attorney!

  • You may want to look at this link:

    http://www.creditcards.com/cre

    In some States and in some circumstances, you may not be liable for the debt, although his “estate” may be. If the card was only in his name, the debt should be paid out of the proceeds of his estate. But if there are no proceeds, and the card is not in your name and you did not guarantee the debt – MAYBE you don’t owe. Maybe.

    It depends on what State you are in, and whether it is a community property state.

    Sounds like you need to talk to a lawyer on this one!

  • You may want to look at this link:

    http://www.creditcards.com/credit-card-news/credit-card-debt-death-1282.php

    In some States and in some circumstances, you may not be liable for the debt, although his “estate” may be. If the card was only in his name, the debt should be paid out of the proceeds of his estate. But if there are no proceeds, and the card is not in your name and you did not guarantee the debt – MAYBE you don’t owe. Maybe.

    It depends on what State you are in, and whether it is a community property state.

    Sounds like you need to talk to a lawyer on this one!

    • Note: the life insurance money is not part of the proceeds of the estate, unless he designated his estate as the beneficiary. If you are the beneficiary, then you get the money. It is possible that you may not have to pay the debt, and you can keep the money. But it depends on a number of factors, so talk to an attorney!

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