If I’m a creditor in a bankruptcy case an the debtor has listed me as a beneficiary on her life insurance policy, can the trustee object to my claim?

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If I’m a creditor in a bankruptcy case an the debtor has listed me as a beneficiary on her life insurance policy, can the trustee object to my claim?

The debtor is former friend. I stand to receive 10-20% on my claim. She listed me on her policy to try to make up for the rest of her debt when she dies. It is Chapter 7. If the trustee knows this, can he object to my claims? Does the timing make any difference?

Asked on July 25, 2012 under Bankruptcy Law, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

It is entirely possible that the bankruptcy trustee can disallow your claim as a creditor of your friend based upon what you have written and you being the listed beneficiary under the debtor's life insurance policy IF you were designated as such within ninety (90) days of the filing for the simple reason that such a designation could be perceive as a preferential "payment" to the detriment of all creditors.

From what you have written, I doubt such will happen.


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