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Bankruptcy before or after D?

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torn2bits posted 4/23/2013 09:57 AM

I just got a letter that me and SAWH $39k which is leftover after he let them repo our boat. We are being sued for the mortgage on the house and he has $40k in credit card debt that he is fighting to say is 1/2 mine in the D, even though those cards have never shown up on my credit report.

He is fighting to say we used those cards for "family" stuff.

Arghh! He could have easily paid $250 per month for the boat, but decided to hand it in. Now we owe $39k. They are saying send a check in 14 days.

Is bankruptcy able to clear this and the house even if litigation already started?

Should I wait til after we D or will I be on my own?

stretch13 posted 4/23/2013 11:44 AM

here's what i know:

first of all, debtors don't care about your settlement. the only thing your settlement can do is serve as grounds for suing him for the money the debtors are collecting from you.

if you divorce both owing half per your settlement, and he then declares bankruptcy on his half, you will be responsible for 100% of his debt. you will then have to declare bankruptcy anyway to clear your debt.

if in the same situation, you declare bankruptcy post-divorce, your XH would then become liable for your half.

i decided to be nice to my XH by declaring joint bankruptcy for both of us before D. that way we had no debts or liabilities or much in assets to argue over.

now...all of this depends on how much money you make, jointly and/or on your own. if together you make too much money, or if you make too much on your own, you can't declare. (you can still make and own a lot - get a good bankruptcy attorney. one told me i was a no-go, the next guy got me through without a hitch. i make darn good money and still did it).

if your XH makes too much for you to declare joint bankruptcy, but you don't make that much on your own, you can wait until after D and declare an individual bankruptcy. that way, he'll be saddled with everything. i almost want you to do it out of spite.

right now your credit is likely shot. bankruptcy can actually improve it...and you definitely recover, credit wise, from a bankruptcy quicker than from mountains of continuous debt you try to pay off.

i'm no substitute for a lawyer, but having put myself through this ringer in a big way, i know a lot about bankruptcy but at least i can share .

good luck. pm me anytime.

ETA: search your state bankruptcy laws...i had to pass something called the "means test" in VA.

[This message edited by stretch13 at 11:46 AM, April 23rd (Tuesday)]

wontdefineme posted 4/23/2013 14:52 PM

Your attorneys will will encourage you to do it before, because if I understand right, if you pay any large amount before bankruptcy they will have to return the money, this includes divorce attorney. Both our attorneys were pushing me to file. I looked into it further. Unless you absolutely need to file fight it until need to. It may disappear off your credit report, but job applications ask, Have you ever filed bankruptcy?

stretch13 posted 4/23/2013 15:25 PM

for the record, i got my secret clearance and DoD job after declaring bankruptcy due to astronomical medical bills in 1998. i've since been hired and cleared by two different DoD contractors and work regularly in sensitive positions.

i'm not saying to take it lightly, it's a big deal....but walking away with shit credit and spending your life paying off your XHs debt is a tough pill to swallow. lots of people eventually end up declaring somewhere down the road anyway. your credit score will start to improve quickly. i bought my first house just 3 years after my bankruptcy in 1998. i built my own damn empire after that because i was NEVER going to be broke like that again. i was an ass...i let XH drag me down investing in his promises and dreams....the ones he ended up losing somewhere in OW's #$&% where they found her egg to fertilize.

talk to a bankruptcy attorney and get some advice from them. mine was great for that...and really on my side.

betrayedfriend posted 4/23/2013 16:02 PM

talk to a Bankruptcy Lawyer immediately, if you're married you'll have to file jointly... if you have judgements in court entered against you, you generally can't declare bankruptcy on them

Crescita posted 4/23/2013 16:14 PM

If the debt is in his name only, and you are not deemed responsible for it in the D, it will be very hard for creditors to come after you. Not to say they can't try, but they will have a shaky legal leg to stand on.

However, if you feel bankruptcy is unavoidable with or without the credit card debt, it might be in your best interest to pursue it jointly while you are still married and can claim his debts.

torn2bits posted 4/23/2013 17:13 PM

Thank you for the replies.

We both make very good money. I have school loans and was able to recently buy a new car.

We also have 2 other cars we own and they short saled our summer home.

My mom is a bankruptcy attorney, but I thought I would ask what your experience is.

The other thing is that I have been at my job many years and probably will retire from this company. I just don't know if we can keep the house and get rid of the $39k since those are in the court process already.

I want a house. All other stuff is good for me, except living in a house and the debt from the boat and the marital home.

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