text: bankruptcy proceedings interrupted by death? bro-in-law had started bankruptcy proceedings and died.  his attorney didn't tell us that papers hadn't been signed, we thought bankruptcy was taken care of.  he has no spouse, children -only property was an old car. now bank informs us of loan that needs to be paid.  attorney says no bankruptcy was filed--he's keeping the fees.  bank wants life insurance policy for loan.  can they take life insurance to pay for loan?  what about other creditors?  we need to know--we had to pay all funeral expenses and would like to be able to be reimbursed for that from life insurance policy. thanks if the life insurance named a beneficiary, then the policy is a contract between the insured and the insurer and the bank is not allowed by law to intervene in that and therefore they are not entitled to the money.  if the money was left to an estate, then the bank could make a claim against the estate and get some money for the car loan that way.  once the estate's bills are paid off, then the remaining money can be divided among the heirs.  the bank itself may have purchased its own policy on the car with themselves as beneficiary.  this is called boli or bank owned life insurance.  it is very common.  just the same the way the bank can't get the life insurance if they are not the beneficiary, you can't get 'reimbursed' for the funeral expenses if you are not named the beneficiary.  only the named beneficiary can decide if they want to pay the funeral expenses.  they are certainly not required to.