Johnson v. USAir Federal Credit Union (In Re Johnson)

MEMORANDUM OPINION

JERRY G. TART, Bankruptcy Judge.

The issue in this case is whether proceeds from a credit disability insurance policy are property of the estate of a bankrupt debtor, or are the property of the creditor beneficiary of that policy. This court holds that the proceeds are not property of the estate, and thus belong to the creditor beneficiary.

The debtors brought this motion for compensatory and punitive damages against USAir Federal Credit Union (“USAir”). The debtors allege conversion of property of the estate. The facts underlying the motion are not in dispute. The debtors…