Do You Have to Report a Life Insurance Payout to a Chapter 13 Trustee?
An approved Chapter 13 Bankruptcy Request is already a generous consideration from the government for individuals or trusts who suddenly faced financial difficulties. It would be another benefit if one of the members of the trust or an individual receives a life insurance payout. So should you report it to a Chapter 13 trustee or not? There is no strict rule which states that you have to but based on goodness and sound relationship, this is the least you can do for all the kind consideration these companies have given you.
Definition of Terms:
Life Insurance Pay-out
These is the amount of money which is received by a beneficiary upon the death of a policy holder. The payment can either be paid in a lump sum or by means of several annuity options as specified in the policy. It is considered as an additional income on the part of the beneficiary and the amount can be used to pay a few of his debts.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is files as wage earner’s plan. It allows an individual to pay its all of its debt within a specified period of time through his or her regular income. Through this procedure, debtors can propose a installment repayment plan for over three to five years depending on the current monthly income of the debtor. Nevertheless, if anyone will use Chapter 13 Bankruptcy then he or she should finish payment of all his or her debts over a period that cannot be longer than five years. If approved by law then creditors will be forbidden to collect efforts from the debtor while he or she is regaining his or her financial income.
Chapter 13 Trustee
A Chapter 13 Trustee is the court appointee tasked to handle Chapter 13 cases. He or she is the one responsible to verify the reasonableness and accuracy of your plan. He or she is also the one who is assigned to distribute these proposal to the creditors. He or she certifies if you are doing your best to pay all of your debts in accordance to the plan which you have submitted to the court. He or she evaluates your lifestyle and considers certain measures which you do to save more on your income like cutting on your entertainment expenses and limiting you diet expenses.
The Chapter 13 Trustee acts as your mediator to the court so it would be best if you remain open and honest with him or her regarding all the income which you will receive. The trustee may be best ally you may ever have during financial crisis so it would be better to keep him or her on your side rather than against you. Remember that one of the factors which may have forced you to file for a Chapter 13 Bankruptcy is financial mistakes in the past. So do not make another mistake which will jeopardize the possibility of sorting out the financial tangles which you have gotten into in the past. Stay true and honest and there will be nothing wrong which will arise from that.