Can life insurance be garnished by creditors?

Submitted by anitaanded1 on Tue, 02/24/2009 - 18:49

My mom has a judgment against her in Florida and the law firm is asking for information about her policy. Will she have to forfeit her policy amount ($7,000) to creditors upon her death?

Thank You!

Posted: 25 Feb 2009 06:10 Post Subject:

IMO the creditors can't garnish the life insurance benefits if it has a named beneficiary. After the death of the policy holder the policy benefits will go to the beneficiary and therefore can't be garnished for paying the debts of the deceased. But if the policy holder remains the owner of the plan at the time of her death, the policy would then get included in her estate and will be used towards paying the unsettled debts.

However, the laws might vary between the states.

Regards,
Juanita

Posted: 25 Feb 2009 06:23 Post Subject:

You may look -up the state provided list of exempted assets to know whether or not the creditors can claim the policy benefits. Following is the list of the exempted assets under the Florida bankruptcy law.

As far I know any cash value and the death benefits of a life policy is an exempted asset according to the FL bankruptcy law. Not only that in FL you can also protect the equity that you have accumulated in an asset from the creditors.

You may need to ask the law firm why they need the information regarding policies.

Hope this helps.

~Jeremy

Posted: 25 Feb 2009 10:58 Post Subject:

My mom has a judgment against her in Florida and the law firm is asking for information about her policy. Will she have to forfeit her policy amount ($7,000) to creditors upon her death?



Allow me to restate your question:

Question: Will the beneficiary of my Mom's life insurance policy in FLORIDA have to forfeit the death benefit paid to the beneficiary because my Mom had a judgment against her when she died?

Answer: No.

Florida Statute 222.13


222.13 Life insurance policies; disposition of proceeds.

(1) Whenever any person residing in the state shall die leaving insurance on his or her life, the said insurance shall inure exclusively to the benefit of the person for whose use and benefit such insurance is designated in the policy, and the proceeds thereof shall be exempt from the claims of creditors of the insured unless the insurance policy or a valid assignment thereof provides otherwise.

Posted: 25 Feb 2009 05:56 Post Subject:

I am wondering if maybe the collection agency is using a scare tatic to get your mother to repay the 7,000 dollars. They are known to do this and it is actually illegal. I am with Gary, ask them why they need this information and you may want to quote the above Statute.

Posted: 29 Aug 2009 09:50 Post Subject: social security

can ss security be garnished

Posted: 30 Aug 2009 12:14 Post Subject:

The answer to the original question is "no" unless the beneficiary is the insured or the insured's estate.

Posted: 10 May 2010 09:25 Post Subject: DEFAULT

I HAVE DEFAULTED IN MY GOV, LOANS AS WELL AS MY PRIVATE LOANS. MY DAD PASSED AND I WAS THE BENFICIARY OF 15K. THAT WAS LEFT TO ME, CAN CREDITORS GARNISH THAT FROM MY SAVINGS ACCOUNT

Posted: 11 May 2010 01:15 Post Subject:

Once it is in your savings account, it is irrelevant where the moncy came from.

Posted: 11 May 2010 11:41 Post Subject:

Your bank account cannot be "garnished" as wages may. But if a judgment is obtained against you, any and all of your assets may be seized by court order to satisfy the judgment.

Posted: 11 May 2010 11:43 Post Subject:

But if the policy holder remains the owner of the plan at the time of her death, the policy would then get included in her estate and will be used towards paying the unsettled debts



Not true, unless there is no named beneficiary. If there is a named beneficiary, regardless of who/what the owner was, the money belongs only to the beneficiary.

Posted: 15 Oct 2013 12:11 Post Subject: life insurance in the state of florida

My father n law past away but owes student loans and medical bills along with credit cards bills. Can the creditors take that money from us or since we are the beneficiary to his life insurance policy they cant. From what I am undetstanding they can take the cash value but not the death benefit of 10,000.

Posted: 15 Oct 2013 02:31 Post Subject:

Can the creditors take that money from us or since we are the beneficiary to his life insurance policy they cant.

If there is a NAMED beneficiary (one or more), then creditors of the decedent cannot have any portion of the life insurance proceeds. They may still have a claim against his estate, but not his life insurance proceeds.

Posted: 04 Jul 2014 07:29 Post Subject:

If the owner dies, then the insurance proceeds become assets of the decedent's probate estate. A life insurance policy will have a designated beneficiary if decedent completed beneficiary designation form for the policy prior to the decedent's death.

Posted: 05 Jul 2014 01:10 Post Subject:

Plagiarism such as this is not tolerated, DavidMayo!

Posted: 21 Jul 2019 10:53 Post Subject: Question, same topic!

My student loans are in default as of beginning of this year. I found out by them taking my tax return which was supposed to be direct deposited! I've enrolled in the Rehabilitation program, and have paid $5 for 4 / 9 months so far. I have a life insurance check for 33k, I got the check and not direct deposit because i didn't want them taking it like my tax return. Well question is, if i go and deposit my money in my savings account, will the creditors/collectors or IRS take some of my money or all of it? Because technically my loans are in default for another 5 months until i'm done with the rehab program, but again, it also states while i am not out of default the very first day, further collection activities will stop once i have agreed to this program. Im confused, please help!

Thank you!

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