How does my life insurance cash value affect my bankruptcy files? 6 Answers as of July 19, 2011

I am thinking about filing for chapter 13 in CA, about 180k in CC debt and 120k in HELOC, which is totally under water. However, my wife and i also have about 55k in universal life insurance (UVL). the cash / surrender value of the two policys combined is about 45k. And of the 45k, we can take a loan out for 80% of it. (so about 36,000 cash if we need) the uvl won't be "mature" until 2015 or so. Would this cash value prevent me from filing chapter 13? or make the payment higher? or should i just borrow the money out, pay the CC down and continue to pay as usual?

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Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
Cash value in life insurance policies are property of the bankruptcy estate. In a chapter 13 the debtor retains all assets. In a chapter 7 certain assets are liquidated by the trustee. There are exemptions that can be claimed to protect (keep) assets within a certain value. This is a complicated issue and a bankruptcy attorney should be consulted.
Answer Applies to: California
Replied: 7/19/2011
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE).
CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE). | Gary Lee Lane
Cash value can be used toward debts.
Answer Applies to: California
Replied: 7/18/2011
Law Office of Harry L Styron
Law Office of Harry L Styron | Harry L Styron
In a Chapter 13 you retain all of your property, including the insurance. The only thing that determines the level of payment is the level of your current income less allowed expenses.
Answer Applies to: California
Replied: 7/18/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
See a lawyer, you can strip off that HELOC in chapter 13. The life insurance can be dealt with easily in Chapter 13.
Answer Applies to: California
Replied: 7/18/2011
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
There are limits to the cash value you can retain on whole life insurance policies. (approximately $11000). Anything over this amount you would have to surrender or pay back this value through your ch 13 plan. Potentially the cash value could be protected as a qualified retirement but you better have it checked out by an attorney.
Answer Applies to: California
Replied: 7/18/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    You should file your Chapter 13 (or 7 if there is no reason to go 13). Cash value protected up to $12K plus another $23K in wildcard protection. Watch out for debt limits on unsecured debt. Hovering close to it.
    Answer Applies to: California
    Replied: 7/18/2011
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