You need to call your lawyer. The answer will depend in part on what your plan says, as well as local practice in your court. Do NOT pay the funeral expenses before you call your lawyer.
Talk to your attorney to determine if life insurance proceeds are exempt in your case and State.
Here is a list of some of the exemptions in your state:
BANKRUPTCY PROPERTY EXEMPTIONS (Indiana Statutes Annotated):
Cannot claim federal exemptions, but can claim the federal non-bankruptcy exemptions
The State of Indiana exempts the property and income below from seizure by the bankruptcy court to pay creditors:
Real Estate: Real or personal property used as residence to $7,500; homestead plus personal property (except health aids) up to $10,000 [34-55-10-2(b)(1)]
Personal property: $100 of any intangible personal property except money which is owed to debtor [34-55-10-2(b)(3)]; health aids, unlimited amount [34-55-10-2(b)(4)]; national guard uniforms, arms and equipment, unlimited amount [10-2-6-3]
Insurance / Annuities: Fraternal society benefits, unlimited amount [27-11-6-3]; group life insurance policy, unlimited amount [27-1-12-29]; life insurance policy, proceeds or cash value if beneficiary is insured's spouse or dependent, unlimited amount [27-1-12-14]; life insurance proceeds if policy prohibits proceeds to be used to pay creditors, unlimited amount [27-2-5-1]; mutual life or accident insurance proceeds, unlimited amount [27-8-3-23]
Pensions / Retirement Plans: Retirement benefits, unlimited amount [5-10.3-8-9]; firefighters, unlimited amount [36-8-7-22 and 36-8-8-17]; police officers, unpaid benefits only [10-1-2-9 and 36-8-8-17]; sheriffs, unpaid benefits only [36-8-10-19]; state-employed teachers [21-6.1-5-17]
Public Benefits / Entitlements: Unemployment compensation, unlimited amount [22-4-33-3]; workers' compensation, unlimited amount [22-3-2-17]; crime victims' compensation unless debt is for the treatment of injury incurred during the crime, unlimited amount [5-2-6.1-38]
Wages: 75% of earned but unpaid wages [24-4.5-5-105]
Miscellaneous: Real estate or tangible personal property up to $4,000 [34-55-10-2(b)(2)]; business partnership property, unlimited amount [23-4-1-25]
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Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship. The opinions expressed herein are those of the author only and the fact that he has worked as an Assistant District Attorney; State Supreme Court Clerk; Special Assistant United States Attorney (Hawaii); Assistant Cornell University Counsel or Judge Advocate, United States Marine Corps should not be relied upon to assume that these statements reflect the policy of these organizations.
In a Chapter 13, the Trustee does not take any of your assets. So you are safe in that regard.
In my opinion, any asset you receive once you have been in Bankruptcy for more than 6 months is outside of the scope of the Bankruptcy & you don't need to worry about exemptions.
But by all means, discuss this with your attorney.
Other guys, do you disagree? If so, why?
Bankruptcy Bankruptcy court Chapter 13 bankruptcy Debt Bankruptcy and debt Chapter 13 bankruptcy reorganization plan Real estate and bankruptcy Real estate Workers' compensation Unemployment compensation Estates Estate property Life insurance and estate planning Employee wages and wage theft