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Divorce and Bankruptcy

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sdo1

Member
What is the name of your state? Illinois

A couple bought my business from me 2 years ago. Both spouses signed personally and individually. Almost immediately they divorced and the wife remarried. In the divorce decree, the husband held the wife harmless for this debt(obviously, this does not affect me). Now both former spouses are filing for bankruptcy. The husbands will likely go through. The wife's will not (total fraud). We reopened the case after it was closed and caught her. Now, it's only a matter of a month or so until I can start collection against her. My question is: Does the hold harmless clause in the divorce survive the ex husbands bankruptcy? I have read case law that it does, and doesn't. I think I can get more money from the wife, if she is able to collect from her ex. Or she might be easier to collect from.
 


seniorjudge

Senior Member
sdo1 said:
What is the name of your state? Illinois

A couple bought my business from me 2 years ago. Both spouses signed personally and individually. Almost immediately they divorced and the wife remarried. In the divorce decree, the husband held the wife harmless for this debt(obviously, this does not affect me). Now both former spouses are filing for bankruptcy. The husbands will likely go through. The wife's will not (total fraud). We reopened the case after it was closed and caught her. Now, it's only a matter of a month or so until I can start collection against her. Q: My question is: Does the hold harmless clause in the divorce survive the ex husbands bankruptcy? I have read case law that it does, and doesn't. I think I can get more money from the wife, if she is able to collect from her ex. Or she might be easier to collect from.
***********
sdo1 said:
What is the name of your state? Illinois

A couple bought my business from me 2 years ago. Both spouses signed personally and individually. Almost immediately they divorced and the wife remarried. A: In the divorce decree, the husband held the wife harmless for this debt(obviously, this does not affect me). Now both former spouses are filing for bankruptcy. The husbands will likely go through. The wife's will not (total fraud). We reopened the case after it was closed and caught her. Now, it's only a matter of a month or so until I can start collection against her. My question is: Does the hold harmless clause in the divorce survive the ex husbands bankruptcy? I have read case law that it does, and doesn't. I think I can get more money from the wife, if she is able to collect from her ex. Or she might be easier to collect from.
 

sdo1

Member
senoirjudge

You missunderstood. Let me rephrase.

It does not affect me in the fact that she still owes me the money.

Does her husband owe her for anything I collect from her.
 

seniorjudge

Senior Member
Q: Does her husband owe her for anything I collect from her.

A: You misunderstand. That hold harmless clause has absolutely nothing to do with you. It is between the husband and the wife and is none of your concern since you were not a party to the lawsuit between them.
 

sdo1

Member
I know this

I already know this and already said this. That's what I meant in the first place.

My question. Does this survive the bankruptcy so that his ex can go after him?
 

sdo1

Member
My Thoughts

I believe that if she can collect from him, I have a better chance of getting my money. This definitely affects me.

Both of them are doctors and make a substantial income. The total judgement amount I have is just over $1,075,000.00
 

seniorjudge

Senior Member
sdo1 said:
I believe that if she can collect from him, I have a better chance of getting my money. This definitely affects me.

Both of them are doctors and make a substantial income. The total judgement amount I have is just over $1,075,000.00
Then you are wasting your time on this chat room.

Get a lawyer.

As I have repeatedly said, this clause has no bearing on you because you were not a party to the lawsuit.

I don't know if she can collect from him without looking at the bankruptcy.

Go after both of them.
 

sdo1

Member
I have two attorneys working on this. I am currently forclosing on a house they put up for collateral. It goes to auction Aug 3rd. My best estimate is that I will only get around 500k out of it. This will give me a shortfall judgement of almost 600k.

I have another attorney who reopened her bankruptcy case. I already know her discharge is getting revoked. (this prompted my question in the first place)

I just like getting "FREE" input from different sources. More minds, more ideas.

And the fact I'm getting conflicting info on the survivorship of his debt to her. It would make a huge difference if I could get more money from her because she is getting it from him. (More monthly that is. We are going to get a writ of garnishment)
 

seniorjudge

Senior Member
sdo1 said:
I have two attorneys working on this. I am currently forclosing on a house they put up for collateral. It goes to auction Aug 3rd. My best estimate is that I will only get around 500k out of it. This will give me a shortfall judgement of almost 600k.

I have another attorney who reopened her bankruptcy case. I already know her discharge is getting revoked. (this prompted my question in the first place)

I just like getting "FREE" input from different sources. More minds, more ideas.

And the fact I'm getting conflicting info on the survivorship of his debt to her. It would make a huge difference if I could get more money from her because she is getting it from him. (More monthly that is. We are going to get a writ of garnishment)
Get 'em!

If it's a lien going into bankruptcy, it's lien coming out of bankruptcy.

Unless the bankruptcy judgment specifically addressed your issue (and I doubt that it did), then I would say you is in the catbird seat!
 

LdiJ

Senior Member
I have total respect for seniorjudge, however as an accountant and someone who is very familiar with bankruptcy law....its probably not a simple as previously indicated.

Unless the husband had a REALLY bad attorney in his bankruptcy, he would have included his former wife as one of his creditors. If he did so, then his former wife would have no recourse against him for the debt to you.

In addition, if you are assuming that the former wife's bankruptcy is fraudulent due to her remarriage....then that is equally incorrect.

In other words...you may get nothing more than the property you are foreclosing against...
 

seniorjudge

Senior Member
LdiJ said:
I have total respect for seniorjudge, however as an accountant and someone who is very familiar with bankruptcy law....its probably not a simple as previously indicated.

Unless the husband had a REALLY bad attorney in his bankruptcy, he would have included his former wife as one of his creditors. If he did so, then his former wife would have no recourse against him for the debt to you.

In addition, if you are assuming that the former wife's bankruptcy is fraudulent due to her remarriage....then that is equally incorrect.

In other words...you may get nothing more than the property you are foreclosing against...
Actually, a "hold harmless" clause is not a debt so I don't see how it could be discharged in bankruptcy.
 

sdo1

Member
He did not include her in the creditor's list. He still has time though. However, in a no-asset case ( a bankruptcy fourm deal) all creditors including ones not listed are wiped out.

No, I made a useless factual statement. Her fraud has nothing to do with her being remarried. It's so blatent, the judge even made a comment when the case was reopened.
 

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