Can I get insurance claim check after filing bankruptcy and home not being reaffirmed?

UPDATED: Oct 14, 2020

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I filed bankruptcy, did not reaffirm the mortgage. I still was unable to keep my house payment made, so I decided to put it up for sale. In the midst of this, I had roofers show up wanting to look at roof and give me an estimate. I never got the estimate from them but did get an insurance check for over $3000. I could not get the roofers or any other roofers to replace the roof for that price. I endorsed the check and sent it to mortgage company with quotes explaining that I could not get work done for that amount but was looking. In the meantime, my house sold (did a short sale) and thought I would get the insurance funds back since I filed bankruptcy, did not reaffirm, etc). I got a call that said they are keeping check to offset short sale. I even had someone at the mortgage company tell me that I should get those funds since house was not reaffirmed? Should I contact an attorney or just count it a loss?”

Asked July 18, 2018

1 Answer

There are a number of factors that contribute to whether or not you can still receive an insurance claim check after you have filed for bankruptcy, and your home has not been reaffirmed. There are a number of restrictions that are related to different insurance policies such as life insurance or accident insurance. This doesn’t take into account the involvement that can come from the State and the Federal government. When you file for bankruptcy, you potentially give all of your property and belongings to the estate. It is up to the trustee to sell or liquidate all of the items, in order to pay the various creditors that you owe money to.

Insurance claim checks may be still paid to you if you have filed bankruptcy, but first you need to disclose when the accident took place. It is also important to determine whether or not the proceeds are covered by any kind of existing exemption. Typically, an accident that has occurred prior to your filing process will not allow for money to be paid to you in the future. Any of the money that you would normally receive, you would have to contribute that money to the efforts to pay off your debt. If the accident occurred after you filed, then the money can still be paid to you moving forward.

Essentially, you need to work with the people that in charge of your bankruptcy process to find out what your situation will be moving forward. They may be able to determine if there is an exemption that you are eligible for that would allow you to continue your payment. Life insurance payments are generally the same. If the death occurred prior to the bankruptcy, or the death occurred within six months of chapter 7, then payments will go to the estate. It is always a good idea to get in touch with your lawyer and team that is in charge of the proceedings. They will be able to give you a definitive answer.

Answered July 20, 2018 by JDouglas

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