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Divorce 1st or BK 1st?

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  • Divorce 1st or BK 1st?

    I need to file BK. My BK L tells me to D first so that I have a better chance at a 7. My D L says that debt arrangements in D settlements are not dischargeable; so he says probably file BK first.

    In question is the car that I owe payments on. W wants to keep the car and it's in my name only. If I file BK before D and go 13; I'll have it in the payment plan. I'm worried that it will be costly and timely to have the car taken out and put in her name. I don't want to be financially responsible for her use of the auto after a D or sep.

    Any help is appreciated? I'm in KY.

  • #2
    Well they both could be correct in their respective areas.

    The Divorce Lawyer is correct that Divorce and property settlements are not dischargeable in a BK. Thus if the D happened first and the divorce decree established that she would get the car and you would continue to pay the car until it was paid off then that could not be discharged. If this is something you don't want then BK first is the answer.

    Depending on your household income, it is possible the BK lawyer is also telling you the truth if both of your incomes combined place you over the median income.
    May 31st, 2007: Petition Filed by my lawyer
    July 2nd, 2007: 341 Meeting Held
    September 4th, 2007: Discharged and Closed.

    Comment


    • #3
      The BK is determined by household income and number of people in the household. Have you checked the exemptions for your state? Look for basics here: http://www.uscourts.gov/bankruptcyco...tcybasics.html

      You might be better off with the divorce first depending upon the HH income situation, but I don't have enough info yet on your specific situation
      Filed CH 7 9/30/2008
      Discharged Jan 5, 2009! Closed Jan 18, 2009

      I am not an attorney. None of my advice is legal advice in any way..

      Comment


      • #4
        I divorced first then filed Chapter 7. The reason is, I didn't want to file jointly with my ex and we didn't own anything joint or have any debt in common so in my case it made sense. I also listed him as a creditor in my BK.

        Since you have issues with a car she wants to keep thats in your name only, you might want to talk to both a divorce and bk attys to figure out the best course of action to take.

        As a side note: it might be better for you overall if you transferred the car into her name.
        Filed Chapter 7 (Primarily Business Expenses) 04/10/2008 FICO 468 :cry:
        341 on 05/06/08:unsure:House appraisal on day 63:blink: 07/10/2008 Discharged-Asset Case!!!:yahoo:08/09 Transu 559, Equifax 636, Experian 647
        Case Closed 07/15/2009 :D:yahoo:

        Comment


        • #5
          listing of my sitch

          This is the situation. We own a house in OH that's in foreclosure. I have short sale pending. There is a HELOC on it. Roughly 70K in negative equity. Several CCs totalling nearly 50K. The car is in my name only, owe about 15K on it. We live in KY and are renting at this time. Most everything is joint except the car.

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          • #6
            Originally posted by treignz View Post
            This is the situation. We own a house in OH that's in foreclosure. I have short sale pending. There is a HELOC on it. Roughly 70K in negative equity. Several CCs totalling nearly 50K. The car is in my name only, owe about 15K on it. We live in KY and are renting at this time. Most everything is joint except the car.
            Will both of you be filing for BK individually or just you? What kind of arrangements will be made in the divorce judgment for repayment of the debt?

            My husband and I filed for divorce first and we are both planning to individually file for BK in February/March. I suspect that our judgment will state something along the lines that we are each responsible for paying our own individual debt and that we are both responsible for paying joint debt. All of it will be discharged through the BKs anyway so it doesn't really matter. My BK attorney said to get the divorce first and that is what I am doing.
            CH7 Filed 2/26/2009 (no asset)
            341 Meeting 4/7/2009
            Discharged 7/10/2009
            Closed 7/28/2009

            Comment


            • #7
              Is the financial problems what's leading to the divorce, or is it some irreconcilable difference?

              This is a tricky question. If your goal is to get rid of the car then you probably need to file before a divorce decree assuming she'd even get the car in the divorce.

              What's your gross income for the last 6 months?
              What was her gross income for the last 6 months?
              How much has she contributed to household expenses on a monthly basis?

              Could she get a loan for the car to buy out the loan you owe, thus putting it in her name?
              May 31st, 2007: Petition Filed by my lawyer
              July 2nd, 2007: 341 Meeting Held
              September 4th, 2007: Discharged and Closed.

              Comment


              • #8
                Originally posted by JRScott View Post
                Is the financial problems what's leading to the divorce, or is it some irreconcilable difference?
                It is not the finances that leading to the divorce; she is a walk away wife.

                This is a tricky question. If your goal is to get rid of the car then you probably need to file before a divorce decree assuming she'd even get the car in the divorce.
                yes, I would like to be rid of the car after the D.

                What's your gross income for the last 6 months?
                What was her gross income for the last 6 months?
                How much has she contributed to household expenses on a monthly basis?
                Mine 40K last 6 months. Her 7.8K last 6 months. She has contributed at best, 200 per month.

                Could she get a loan for the car to buy out the loan you owe, thus putting it in her name?
                No, she is broke and writing bad checks. Plus she just used my individual checking account for the first time for an on-line dating service. I working with them to get my money back.

                Comment


                • #9
                  If she is doing things like writing hot checks, it might be wise to get the divorce asap so you aren't liable for anything she does financially. And by the looks of the income, you will probably be over the median with or without her.

                  I would get yourself out of the marriage first, then take care of the messed up finances.

                  Comment


                  • #10
                    From http://www.legalconsumer.com/bankruptcy/

                    Kentucky Median Income
                    Kentucky Bankruptcy Information
                    If your average monthly income for the past six months is below the state median for your size household, you meet the requirements of the "means test" (section 707(b)(2) of the bankruptcy code) to qualify for Chapter 7 Bankruptcy.
                    Persons in Household Monthly Annual
                    1 $2,940 $35,274
                    2 $3,649 $43,793
                    3 $4,445 $53,343
                    4 $5,258 $63,097
                    5 $5,833 $69,997
                    6 $6,408 $76,897
                    7 $6,983 $83,797
                    8 $7,558 $90,697
                    9 $8,133 $97,597
                    10 $8,708 $104,497


                    Source: U.S. Trustee, U.S. Department of Justice (for cases filed on or after February 1, 2008)

                    Note. The means test is but one of several hoops you must jump through. Even if your income is low, a judge can prevent you from filing Chapter 7 if it appears that you have enough income to repay a substantial portion of your debts in a 3-year Chapter 13 plan.

                    Comment


                    • #11
                      I've done extensive research with the means test. I am aware of where I stand in those figures. My main concern is that I want to file both in the most advantageous order. In other words, I don't want to be in a position where I have non-dischargeable unsecured debt if I divorce first. I know that support, alimony, and like is non-dischargeable. Property settlements are a little more ambiguous. I have one L saying to D first and my D L saying BK first.

                      I'm just trying to weigh those options. I will most likely have the kids and I don't want to be financial liable for a financially risky ex-spouse.

                      Comment


                      • #12
                        In similar cases, we have tried to get the other spouse to filing jointly prior to divorce. Then neither of you will be liable for anything in the divorce, and you can both leave debt free. It also helps with exempting assets, when you file jointly, you get double the exemptions than if you were to file individually.

                        Our firm does family law, business law, estate planning, as well as bankruptcy. Many times we see people come in not knowing if they want a divorce or if they want to file bankruptcy. It of course varies on the situation but it might be worth it to you for both of you to file prior to the divorce. As for the car she is driving that you are making payments on, get rid of it. Why should you make payments on a car she is allowed to drive if you are filing bankruptcy and seeking a divorce. Doesn't make sense.

                        Comment


                        • #13
                          Originally posted by Tbornetun View Post
                          In similar cases, we have tried to get the other spouse to filing jointly prior to divorce. Then neither of you will be liable for anything in the divorce, and you can both leave debt free. It also helps with exempting assets, when you file jointly, you get double the exemptions than if you were to file individually.
                          I am accomplishing the same thing but I am getting the divorce first. And, we couldn't qualify for a CH 7 if we filed jointly because we would be over the median income for our state. However, we can both file CH 7 on our own because our individual incomes will be under the median. As long as the divorce judgment states that we are each responsible for debt in our name individually and we are both responsible for paying the joint debt, aren't we going to end up the same way?
                          CH7 Filed 2/26/2009 (no asset)
                          341 Meeting 4/7/2009
                          Discharged 7/10/2009
                          Closed 7/28/2009

                          Comment


                          • #14
                            Originally posted by Tbornetun View Post
                            As for the car she is driving that you are making payments on, get rid of it. Why should you make payments on a car she is allowed to drive if you are filing bankruptcy and seeking a divorce. Doesn't make sense.
                            The only reason is that I know she can't get a good car on her own because of the credit situation. When she has the kids; I want to know that they are in a dependable car and a safe car. That's the only reason. Having said that, I don't want to be liable as she is going out all the time when she doesn't have the kids.

                            Comment


                            • #15
                              My soon to be ex is filing before the divorce, so for him, the family income is below the means test when he files. I will file BK after the divorce is final. I have been a mostly stay at home mom for 18 years and a full time student for the past 2 years. Due to almost $60K in joint credit card debt, I have no choice but to file since he is.

                              Whatever is most advantageous for you. You probably will not get the "fairest" most optimal result since you are no longer a "team", but you can mitigate your losses. No court, bankruptcy or family court is going to absolve you of everything because your ex or soon to be ex is a whacko, or a liar or a thief. You may get stuck paying for something that just isn't fair. You may have to settle for the least financially damaging solution rather than the best case scenario, because absolute justice, for you, may not exist. I learned the hard way. Doesn't seem fair that he can live it up on our joint credit for the last 5 years and then BK it away, leaving me holding the ball, but he can. I could try to get a spousal support order to cover his 1/2 of the debt, you know, "make him pay" but he really doesn't have the means to.After my initial shock, I'm resigned to it.

                              I was pretty much destroyed over the realization that not only is my marriage OVER, I am going to have to file bankruptcy too

                              Comment

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