bankruptcy and divorce

[jhrebik]

What is the name of your state? Virginia

My boyfriend is in the middle of a divorce.....yuck! He is reluctant to split any joint debt for fear that his ex will file bankruptcy and the collectors will come look to him to settle it, with interest and penalty. However, the divorce decree states that she is to release him of any liability for assumed property. How does this get conveyed to creditors? In other words, how does he prevent this debt from falling back in his lap??

 

[bigun]

He needs to understand that creditors are not bound by divorce agreements. They need to close all joint accounts and make arrangements to place the debts on individual cards or, each obtain some other sort of loan on an individual basis.
We {and other sites} see a lot of disaster stories that start with joint accounts post divorce.

 

[jhrebik]

So, just to reiterrate, she can't write a letter to creditors saying that the debt is solely her own and to release him from any liability regarding that debt?

 

[ConnorW]

Joint debt is messy in a divorce. My girlfriend got bitten on the butt because of her divorce. I'd talk with a local attorney to keep my bases covered.

 

[kwalla]

So, just to reiterrate, she can't write a letter to creditors saying that the debt is solely her own and to release him from any liability regarding that debt?


Your Answer: Writing a letter to the creditors telling them that she is soley responsible for the date would do no good. The creditors don't care what the divorce decree states. They will come after your boyfriend for every joint account he shared with his wife. If she won't refinance the debt into her name (and only her name) or if she files for bankruptcy, your boyfriend's best bet is to follow suit (file bankruptcy himself) if he can't afford the debt.

 

[jhrebik]

Wow, sounds like there aren't a whole lot of alternatives, and she REALLY nailed him with those credit cards!!! But by the same token, doesn't that make it so that any community property, that when one or the other assumes the financing for, which was once listed jointly, that the other may still have a claim to any equity later on, as well as any liability for the debt if in default??

For example, if a house is in his name, and she assumes the loan into her own name, but based on the original financing, he is still responsible for the debt if she defaults but is he or is he not then entitled to the equity upon sale?

geez, I want to be a lawyer!!!

 

[bigun]

Virginia is not a community property state.

 

[jhrebik]

I really appreciate all of your help. However, one more, and I suppose the most relevant question: how likely is it that she will in fact be granted bankruptcy???

The debt to be assigned is about $15k. In the settlement, she is getting a house with about $30k equity and a relatively modest payment, all of the household possessions, a car worth about $18k, another worth $4, and approx. $1800 a month support/alimony in addition to her income. She claims that if she is assigned ANY debt, she will file bankruptcy. Is there a fine line here of how much he can assign with it still being in her best interest NOT to file??

Btw. she lives in AR

 

[Ladynred]

The absolute bottom line/lesson here, IMO, is NEVER HAVE JOINT ACCOUNTS !!! Especially credit cards.. they are a huge disaster. We'd all like to think our relationships will be wonderful and last blissfully forever. The statistics on divorce say otherwise, it fairly SCREAMS otherwise. Houses are different, its rare that only one person in a couple can buy a home individually any more, and it comes with its own risk in divorce.