Bankrupt with a Life Insurance policy

Pebbs_2

Hi,

My brother became a voluntary bankrupt in September last year. He was advised by the Insolvency Dept to carry on with his life insurance payments which he has had for 18 years as he couldnt be without life insurance. He didnt want to lose his insurance so his son's mother had it transferred into her name.

Today my brother has received a letter telling him that if he carries on with the insurance, should he die, his family would not receive anything and the insurance money will be payable to his bankruptcy estate, even if he should die after being discharged from bankruptcy. :eek: Surely this cannot be right? :huh: The insurance is no longer in his name.

In the letter it also stated that the policy could be assigned back on the receipt of £50 by the Official Receiver.

Can anyone help clarify this please as it certainly doesn't seem right.

Thanks.

Pebbs

dottydora

Pebbs wrote: »

Hi,

My brother became a voluntary bankrupt in September last year. He was advised by the Insolvency Dept to carry on with his life insurance payments which he has had for 18 years as he couldnt be without life insurance. He didnt want to lose his insurance so his son's mother had it transferred into her name.

Today my brother has received a letter telling him that if he carries on with the insurance, should he die, his family would not receive anything and the insurance money will be payable to his bankruptcy estate, even if he should die after being discharged from bankruptcy. :eek: Surely this cannot be right? :huh: The insurance is no longer in his name.

In the letter it also stated that the policy could be assigned back on the receipt of £50 by the Official Receiver.

Can anyone help clarify this please as it certainly doesn't seem right.

Thanks.

Pebbs

I don't know about the changing names on it bit, but I do know that if your brother sent the official receiver £50 to buy the beneficial interest in the policy that the official receiver would then have no interest in it. I am not sure (since I was confused in a recent post) whether the OR still has claim on it if it pays out before discharge, but certainly after discharge there would be no claim on it if the £50 had been paid. there, clear as mud.

sizzler

That does not sound right. If OR realesed it surely it stays out of BR estate.

I am not sure but hope someone can help advise better.

Regards sizzler

confused76

i have heard of this before unfortunately. you can either set up a new policy or pay the £50 to keep your old one...rubbish i know

tech2_2

When you have an interview with the OR they cover this and usually say that unless you buy it back for £50 then if you die they have it all and not your family.

dottydora

tech2 wrote: »

When you have an interview with the OR they cover this and usually say that unless you buy it back for £50 then if you die they have it all and not your family.

Surely they can only take what you owe your creditors plus any expenses, not ALL of it????

dojoman

This is right, I have just received letters saying that my wife and I can buy back the BI in our life assurances for £25 pp per assurance, therefore we can buy them both back for £100. I am planning to do this as they are for quite large sums, and I think it would be difficult to get similar ones now we are BR. Once we have paid for them I am going to arrange for the proceeds to go to one of daughters. This way if something does happen whilst we are still BR the money will go to the family and not our creditors. At least that is what I think I can do!

dojoman

dottydora wrote: »

Surely they can only take what you owe your creditors plus any expenses, not ALL of it????

No they can take it all if you are still BR. If there was any surplus after paying your creditors then it should go to you.

Pebbs_2

Hi again,

Thanks for all the replies.

I've just spoken to my brother again and he tells me that he forgot to tell the OR he is no longer paying for the insurance and that his son's mum has transferred it to her, so I guess that's why he got the letter. :rolleyes:

Thanks again.

Pebbs

dojoman

Is the LI for the life of your brother? When did he stop paying the premium?

debtinfo

He cannot transfer it after the bankruptcy order as it is not his to transfer. The OR can have the transaction set aside. It would be much better to just pay the £50 to get it back and then he is free to do as he wishes.