Question about joined account

[carlos74]

I will be filling for chapter 7 in the next 3 months. I got divorced by the end of last year. There is a Wachovia credit line of 10,000 with both of our names. I'm afraid that if I file for chapter 7 they are going to come after her and mess up her credit, she is aware and very scared too. the balance is 10,000 right now and I have no ways to pay it off. She is the mother of my son and I don't want her to have any problems. Any ideas in how to fix this problem?
Thanks

[HHM]

What is your time line for filing BK. 1 month, 3 months, 6 months, 1+ year.

Unfortunately, there is no easy solution here (and actually, probably no solution). If you file BK, then yes, your ex spouse will become solely liable for the account, vis a vis the creditor (regardless of the divorce decree). I suppose, if you can wait 1 year before filing BK, you can transfer the balance onto a credit card that is solely in your name (if you can), but that is a risky move.

In the short term, the only way to get rid of this debt is if both you and your ex-spouse file BK. Otherwise, someone will be on the hook.

[carlos74]

thanks

I understand, I will have to file in the next 3 months, I guess only solution will be to reafirm that debt and pay it off myself after my other accounts are erased. I'm wondering if a lawyer can bring this balance down negotiating without hurting my ex wife credit. I also have around 12,000 in a 401k acct. hmmmmm... I will appreciate any comments.

[lrprn]

I also have around 12,000 in a 401k acct. hmmmmm... I will appreciate any comments.

Your 401K is protected when you file - the trustee can't touch it. If you cash it out, you are turning a protected asset into an unprotected asset. Yes, you'll have the money to repay the $10K credit line, but that amount will be a whopper of a preferential payment - the trustee will go after it. Also if your 401K works like ours, then you'll also have to deal with a HUGE 25% of the amount borrowed tax hit the following year if you can't re-deposit everything back into your 401K before the end of the year

Please don't withdraw money from your 401K unless you've discussed all the ramifications with your bk lawyer and an accountant or tax lawyer as well. You could well be jumping out of the frying pan right into the fire!