I don't believe that a creditor will accept a life insurance policy. Your best bet is to consult with a bankruptcy attorney as to your options. Good luck.
DISCLAIMER: This answer is provided solely for informational purposes only. This answer does not constitute legal advice, create an attorney-client relationship, or constitute attorney advertising. Liewen Law is fully compliant with every State and Federal Law, including California SB 94 and the related Civil Code Sections, as well as the FTC Mortgage Assistance Relief Services (MARS) Final Rule. Liewen Law is a debt relief agency helping consumers file for bankruptcy relief under the United States Bankruptcy Code. Liewen Law maintains this website for marketing and informational purposes only. None of the information or materials on this site is legal advice. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. Said information is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship. While we make every effort to keep this site accurate and up to date, we do not guarantee its accuracy and are not responsible for inaccuracies, errors, or omissions.
Get a free consult from a bankruptcy attorney to see what all your options really are.
The way I see it, maybe you can
1. file bk and exempt this life insurance, paying that creditor who is suing you nothing.
2. settle the debt for pennies on the dollar. Maybe with a repayment plan, maybe using that life insurance policy.
Unless it's a private creditor and you have a relationship with them, they probably don't want this life insurance policy. On the other hand, you might be able to find a 3rd party who is willing to take it over for cash now. It all depens on the deal you have with your insurance.
The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: www.avanesianlaw.com for more information about my services.
If this is your only debt, I understand why you are reluctant to file bankruptcy. But a bankruptcy attorney can advise you if doing nothing might be an okay way to resolve this legal problem. Unfortunately, there aren't enough characters to pose a question & provide all of the necessary information. There are some fine bankruptcy attorneys in your community. Look for additional information about them by using the "Find a Lawyer" search tool here on Avvo. Hope this perspective helps!
As often happens in answers here - it depends... I look to see what you have now, and especially what you want to have when you are 65 or 70. Be careful what you do. I do a little bankruptcy, but I would advise you to see another colleague whom I would refer you to in Santa Rosa, Call me.. best Michael 707-529-5219