When your attorney files your bankruptcy petition, all your property goes into your “bankruptcy estate”. Generally speaking, your bankruptcy state is made of all property in which you have a legal or equitable interest. Property that is exempt is protected from sale. Property that is non-exempt can be sold by the trustee, and the proceeds can be given to your creditors.
Property that comes into your possession, or that you become entitled to within 180 days of filing your petition, also gets included in your estate. Proceeds from a life insurance policy in which the debtor is the beneficiary will become property of the estate.
Section 541(a)(5) of the Bankruptcy Code states:
Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date—
(A) by bequest, devise, or inheritance;(B) as a result of a property settlement agreement with the debtor’s spouse, or of an interlocutory or final divorce decree; or(C) as a beneficiary of a life insurance policy or of a death benefit plan.
