Bankruptcy after divorce, can they come after my ex assets?
For those of you who want to split and bear no hard feelings towards each other, it is an important question. This is quite a complicated issue and if you think you can get away filing for bankruptcy after divorce, you may be right. On the other side, you may be wrong and the creditors will come after your spouse assets with guns blazing.
One of my wife girlfriends divorced last November. In late September, basically 6 weeks prior to the divorce, she and he would be ex split their assets and did it rather amicably. Not that they had much of assets to start with, but both were working and seemingly stable financially. Never was a word about bankruptcy and such. Just two nice persons not suited for each other, whatever that means. Regardless ...
The owned a condominium which he quit-deeded to her and he never was on the mortgage because his credit history was bad. Everything else they had individually to begin with, credit cards, car loans, etc. There were 3 joint bank accounts - 2 saving and one checking which they closed before divorce.
Well, she lost the job that was hers for 8 years and has been getting unemployment for close to 6 months. By now she has plenty of credit card debt, and with bleak job prospects is seriously thinking to file Chapter 7 Bankruptcy. Talk about bankruptcy after divorce. She called my wife to check with me before she goes to a bankruptcy lawyer if she does file, can the creditors go after her ex husband assets since most of those were gained while they were together? She was too embarrassed to call some neighbourhood lawyer herself.
That is all very nice, you know, with respect to her husband and they are still friends, and I am flattered but I am not a lawyer, just a blogger and burned out mortgage broker, hahaha. But believe me, it is easier to do some research than to say 'no' to my wife. So I dug out what I could on Internet and still was confused. Then I did pick up the phone and call someone. They told me, there was $100 fee for a consultation. So I called another one. She was too busy, but her secretary, a male by the way, told me that he is the closest thing to the lawyer there is, only without ever trying to pass bar. Instead, he has so much experience dealing with bankruptcy cases, including the ones after divorce, that five attorneys do not know as much as he does. So this is what I was told, and by the way, I am still so very confused.
In three words, yes they can. But not because he accumulated some of his assets while they were together. Even if your name wasn't on the ex's credit card accounts, in many states and Illinois is among those, creditors can come after you. Debts that belongs exclusively to your ex can still fall under the Family Responsibility Statute which in theory allows creditors to go after both ex spouses even when only one files for bankruptcy after divorce. In practice, however, such debts are rarely pursued because the law imposes a rather stiff penalty against creditors that improperly pursue a spouse for non-family expenses. And since it is often quite difficult if not outright impossible to prove that debts fall under family related expenses, the vast majority of creditors do not bother with them.
That is very confusing to many, so if you are planning to divorce or already divorced, and thinking of bankruptcy, consult with a qualified lawyer who specializes in Chapter 7 and 13 bankruptcies. Do not leave space for a surprise. That is of course if you still care about your ex.
Mon Aug 2, 2010 05:08PM | Copyright: www.bad-credit-advisor.com | More in Personal Finance | Comments (0)
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