During the height of the market, many people purchased investment properties that they could no longer afford. As a consequence, if the mortgage is not paid, the lender will initiate foreclosure proceedings. There are options available that will allow you to keep both your homestead and your investment property and save money in the process. For example, if your investment property in underwater, you are delinquent on the mortgage and you owe the lender $150,000 but the appraised/fair market value of the property $80,000 you can “cram down” the mortgage payment and pay the lender back $80,000 + 5.25% interest over a 5 year period, keep the property and potentially wipe out the $70,000 to the lender.
Your injury claim is an asset of the bankruptcy estate. It is very important to keep both your personal injury and bankruptcy attorney informed to best protect your interests. In both a Chapter 7 and Chapter 13 bankruptcy, if the claim arose prior to filing, you must disclose your injury claim on the bankruptcy petition. If your claim arose after your filed your bankruptcy petition, it must still be disclosed to the Chapter 13 trustee BUT NOT in a Chapter 7 case. If your injury occurs after you filed for bankruptcy, even the day after you file, it does not become part of the bankruptcy estate.
Car Accident – Must Treat within 14 Days or Lose your Benefits
Whether you are married or separated, you can still file for bankruptcy on your own. There is no requirement that your spouse file for bankruptcy.
Chapter 7 or Chapter 13 Bankruptcy?
If you are married and maintaining the same household, then the trustee will consider your joint income to determine if you are over the median income qualifications for a Chapter 7 bankruptcy or to determine what you are financially able to repay in a Chapter 13 bankruptcy.
If you are separated and maintaining separate households, you expenses should also be listed separately.
Contact Gina Rosato Law Firm, P.A. to discuss your Bankruptcy Options
Your divorce decree is a contract between you and your ex-spouse. This is completely separate from any contractual obligations you have with your mortgage lender or your credit card company.
Therefore, if you have a joint debt, even though your divorce decree says your ex-spouse will assume all the debt, your creditors can still come after you for the debt. For example, suppose you and your ex-spouse had a joint credit card with Bank of America for $20,000. During your divorce, your spouse assumes payment of the $20,000 debt. Your ex-spouse does not make a payment on this debt or files for bankruptcy. Bank of America can come after you for the $20,000 debt. If this happens you would need to pay it or file for bankruptcy. If you end up having to pay a anything to Bank of America you would have a cause of action against your ex-spouse once you have re-paid the creditor. If you and your spouse have significant amount of joint debt, it maybe beneficial to consider bankruptcy prior to filing for divorce to resolve these issues that may cost you more down the road in payments to creditors and additional attorney fees.
Contact Gina Rosato Law Firm to discuss your Bankruptcy Options
It is common for a bad financial situation to spiral into marital discord. One spouse may incur a significant amount of debt, fail to work for an extended period of time, or does not consult the other spouse when making purchases on joint accounts.
Divorce and Bankruptcy
If you and your spouse have a significant amount of joint debt it may be best to entertain bankruptcy as an option prior to filing for divorce. Bankruptcy is a much cheaper alternative to racking up a large bill with a family lawyer to argue about who is going to take over which debts when both people may be able to get rid of all the debt.
Furthermore, your spouse cannot assume your debt in a settlement agreement. For example, if you have a joint judgment against you from Company A for $50,000 and your divorce decree says your spouse should assume all debt from Company A. Company A can still pursue you for the debt despite what your divorce decree says. You would then have to sue your spouse to recover what you paid Company A. Therefore, if both spouses owed money to Company A, that could have been discharged in a bankruptcy, that would obviate the need and expenses to file suit against the other spouse for collection of debt after the divorce is finalized.