widowed, have enough life insurance to pay debts. Attny telling me to put it in 401K & declare bankruptcy?

Question

Just enough life insurance to pay creditors. Attorney wants me to put it in 401K, declare Chapter 13 instead of paying debts. Am 52 yr old widow with no retirement savings, but
good working income as nurse. Not better to pay debts and
start saving income for retirement?

Answer 1

I have no advice for you, but I just wanted to tell you I am so sorry for your loss. I hope everything works out for you.

Answer 2

I would definately get a second opinion on that from either another lawyer or a financial advisor. My understanding is that bankruptcy is RARELY a good idea, actually never although sometimes necessary, but I would think this life insurance might put you in a position whereby you could get rid of a good portion of the debt enough so that it is manageable, while still keeping a portion, maybe 40 percent or so of the lump sum for long term retirement, or paying off all debt, both seem better to me than filing bankruptcy.

Answer 3

Doesnt sound like good advice as the trustee is going to look back to see what if any types of transfers were made prior to filing. As soon as they see this, i imagine that you will end up with more problems.

I dont know legal ramifications, but maybe what you can do is contribute higher % to your 401k at work, leaving less take home money, and less money to repay on a chapter 13.

get a second opionion from different lawyer.

Answer 4

The attorney should be disbarred. He is advising FRAUD. Besides, you CAN'T put insurance proceeds in a 401(k). Pay off the debts and use the payments you no longer have to build a retirement fund.

Answer 5

look i would rather pay debt than be called a thief and that is what i consider any one to be if they declare bankruptcy === you contracted in good faith for goods/service and so you owe these folks the money -- so downsize and pay off your debts!!!

Answer 6

Your attorney sounds unethical to me.