The Colorado Life Insurance Exemption For Bankruptcy
When your attorney files your bankruptcy petition, all of your assets will create a bankruptcy estate. Assets in the bankruptcy estate are either exempt or nonexempt. If an asset is exempt, that means that it is protected from sale by the bankruptcy trustee. He or she can not sell that property. However, the trustee may sell nonexempt property and give the proceeds to your creditor. Whether he will depends on the value of the property.
One asset that can be both exempt and nonexempt is a life insurance policy with a cash surrender value. Colorado Revised Statute § 13-54-102(1)(I)(I)(A) provides that if the cash surrender value of a life insurance policy is $100,000 or less, then it is exempt. Any value over $100,000 is nonexempt and can be taken by the bankruptcy trustee.
Further, if you have increased the case value in the 48 months prior to the filing bankruptcy, that amount is not exempt.
If you have any questions about whether your life insurance policy is exempt, you should talk with a Colorado bankruptcy attorney.