ex failed to refinance, now filing bankruptcy

[GrandmaOH]

What is the name of your state (only U.S. law)? IN

This is a question I'm asking for my son. Wife(now ex) filed for divorce July 2012, finalized Feb 2013. She got the house, custody, child support. Her lawyer had our son sign a quit claim deed with the understanding ex-wife was going to refinance the house in only her name. He moved out but was back in the house from June until mid-December when they were talking reconciliation. He contributed to the household expenses but he never saw the house payment because he thought she refinanced. He moved out in mid-December and she started talking bankruptcy 3 months later. He also found out she never refinanced. He just got notice of her bankruptcy. She moved out of the house a couple months ago and sold all the appliances that came with it. She cut off the electricity so the basement flooded when it rained hard in March, probably flooded again right now.

How will her bankruptcy affect our son since he is still on the house loan? They bought the house about 2 years before the divorce, so not much would have been paid off, and with her selling the appliances and letting the house sit with a flooded basement, where the electric furnace is, the value of the house has to have dropped a lot from the original purchase price. Our son has his own debt with child support that still accrued while they were living together and student loan debt. He can't afford to pay off the house loan, he wouldn't get possession if he did pay it off. Will he have to file bankruptcy to get out from under this house loan?

 

[Proserpina]

What is the name of your state (only U.S. law)? IN

This is a question I'm asking for my son. Wife(now ex) filed for divorce July 2012, finalized Feb 2013. She got the house, custody, child support. Her lawyer had our son sign a quit claim deed with the understanding ex-wife was going to refinance the house in only her name. He moved out but was back in the house from June until mid-December when they were talking reconciliation. He contributed to the household expenses but he never saw the house payment because he thought she refinanced. He moved out in mid-December and she started talking bankruptcy 3 months later. He also found out she never refinanced. He just got notice of her bankruptcy. She moved out of the house a couple months ago and sold all the appliances that came with it. She cut off the electricity so the basement flooded when it rained hard in March, probably flooded again right now.

How will her bankruptcy affect our son since he is still on the house loan? They bought the house about 2 years before the divorce, so not much would have been paid off, and with her selling the appliances and letting the house sit with a flooded basement, where the electric furnace is, the value of the house has to have dropped a lot from the original purchase price. Our son has his own debt with child support that still accrued while they were living together and student loan debt. He can't afford to pay off the house loan, he wouldn't get possession if he did pay it off. Will he have to file bankruptcy to get out from under this house loan?

Oh no. Tell me he didn't.

Yeah, if he's still on the loan, they'll come after him.

Bankruptcy is a viable option. It's possible to do it pro se, but not advisable unless you really, really know what you're doing. In other words, he needs an attorney.

He can also go to bkforum.com - they do have attorneys there, and at least he'll get a rough idea of what he might be dealing with.

With that said, someone else may stop by with a better idea. I went for bk, because he's young enough that it might free up resources so he can sort out the rest of his financials.

 

[justalayman]

Her lawyer had our son sign a quit claim deed with the understanding ex-wife was going to refinance the house in only her name.

where was his lawyer telling him not to sign the deed until such time he was alleviated from the debt?

How will her bankruptcy affect our son since he is still on the house loan?

he will owe for the loan all by himself.

Will he have to file bankruptcy to get out from under this house loan?

if he cannot otherwise pay the debt, that is a possibility.

 

[latigo]

What is the name of your state (only U.S. law)? IN

This is a question I'm asking for my son. Wife(now ex) filed for divorce July 2012, finalized Feb 2013. She got the house, custody, child support. Her lawyer had our son sign a quit claim deed with the understanding ex-wife was going to refinance the house in only her name

He moved out but was back in the house from June until mid-December when they were talking reconciliation. He contributed to the household expenses but he never saw the house payment because he thought she refinanced.

He moved out in mid-December and she started talking bankruptcy 3 months later. He also found out she never refinanced. He just got notice of her bankruptcy. She moved out of the house a couple months ago and sold all the appliances that came with it. She cut off the electricity so the basement flooded when it rained hard in March, probably flooded again right now.

How will her bankruptcy affect our son since he is still on the house loan?

They bought the house about 2 years before the divorce, so not much would have been paid off, and with her selling the appliances and letting the house sit with a flooded basement, where the electric furnace is, the value of the house has to have dropped a lot from the original purchase price.

Our son has his own debt with child support that still accrued while they were living together and student loan debt. He can't afford to pay off the house loan, he wouldn't get possession if he did pay it off. Will he have to file bankruptcy to get out from under this house loan?

First, not you, but you son should be on board here.

Secondly, it is critical that he consult with his attorney as there are subtle legal issues here that neither of you likely to comprehend. Some of which may be of benefit to him, but only if he acts quickly.

Basically these issues have to do with whether or not the ex-wife is legally obligated to indemnify your son from any further liability on the mortgage indebtedness.

And that can only be determined by knowing what is meant by your expression that there was an "understanding" made at the time of the quitclaim deed that she would assume the mortgage payments.

The attorney will need to know whether there is any documentary evidence - either in the language of the quitclaim deed, a separate agreement or in the divorce decree - where she was committed to indemnify him of any further responsibility on the mortgage note.

If so, her obligation to him may not be dischargeable in her bankruptcy proceedings. *

But please understand that in order to contest her right to discharge her responsibility to him he will need the services of an attorney experienced in the practice of bankruptcy law. Plus he must act promptly.


[*] 11 U.S. Code § 523 - Exceptions to discharge

(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit;

 

[justalayman]

but even if she remains liable to him for the debt, does it really matter since she is filing bk so obviously has limited resources and due to the bk, is unlikely to be able to obtain a loan to pay the OP's son?

so she owes the ex the money; Does that mean the lender cannot come after the op's son for the money? If not, it sounds like an exercise in futility.

 

[GrandmaOH]

OK, I'm first in line to beat myself with the stupid stick, so that's done. Now on to my next question, and now I have skin in the game.

Son failed to contact a lawyer to protect himself in the ex-wife's bankruptcy. He played ostrich. I figured it was his life, I asked for advice here and passed it on. I was done with it.

He is employed and bought a beater car, owns it free & clear. Car developed a problem & needed a repair that he couldn't afford outright. He's working hard to clean up his debts and back child support. I agreed to co-sign a loan. The terms of the loan mentioned it would become payable in full immediately if he filed bankruptcy. I was not overly concerned since I could write a check to pay it off, if needed.

I saw on the court's website today that the bank filed a foreclosure on the house, and named both the ex-wife and our son. I thought the bankruptcy she filed would have gotten her name off the loan? The address of the house is listed on the court website for both of them, it's been 11 months since our son was there so I'm not sure if he'll get notified by mail. There's also an entry under the ex's name and address that says, "Other Agency Numbers
530007 Protection Order Registry". Son thinks that means she is protected from the foreclosure by the bankruptcy. He also thinks he can just walk into court and show them the divorce order and get out of being included in this foreclosure.

I'm telling him he can't get out of the foreclosure, and to see a lawyer now. His credit is non-existent; mine is 800, give or take 20. Should I pay off his car loan immediately, or let him take care of the monthly payments until the foreclosure is settled and he'll have to come up with money or file bankruptcy?

 

[CourtClerk]

OK, I'm first in line to beat myself with the stupid stick, so that's done. Now on to my next question, and now I have skin in the game.

Son failed to contact a lawyer to protect himself in the ex-wife's bankruptcy. He played ostrich. I figured it was his life, I asked for advice here and passed it on. I was done with it.

He is employed and bought a beater car, owns it free & clear. Car developed a problem & needed a repair that he couldn't afford outright. He's working hard to clean up his debts and back child support. I agreed to co-sign a loan. The terms of the loan mentioned it would become payable in full immediately if he filed bankruptcy. I was not overly concerned since I could write a check to pay it off, if needed.

I saw on the court's website today that the bank filed a foreclosure on the house, and named both the ex-wife and our son. I thought the bankruptcy she filed would have gotten her name off the loan? The address of the house is listed on the court website for both of them, it's been 11 months since our son was there so I'm not sure if he'll get notified by mail. There's also an entry under the ex's name and address that says, "Other Agency Numbers
530007 Protection Order Registry". Son thinks that means she is protected from the foreclosure by the bankruptcy. He also thinks he can just walk into court and show them the divorce order and get out of being included in this foreclosure.

I'm telling him he can't get out of the foreclosure, and to see a lawyer now. His credit is non-existent; mine is 800, give or take 20. Should I pay off his car loan immediately, or let him take care of the monthly payments until the foreclosure is settled and he'll have to come up with money or file bankruptcy?

Your son is not interested in helping himself. Stop trying to save him. He's a big boy. Old enough to get married and get divorced. You're more involved in his relationship than he is - and you obviously can't see there is something wrong with that. Let the whole thing crumble around him, maybe THEN he'll get up and do something instead of letting his mommy do it.

In other words, the only lesson you have yet to teach your child is the one he needs to learn now. How to be a man.

 

[GrandmaOH]

I guess I didn't make my question clear. I want to protect my credit score and need to know if the foreclosure proceedings will have an affect on the loan I cosigned. I advised him to see a lawyer, I'm done with that. I'm protecting myself at this point.

 

[single317dad]

I guess I didn't make my question clear. I want to protect my credit score and need to know if the foreclosure proceedings will have an affect on the loan I cosigned. I advised him to see a lawyer, I'm done with that. I'm protecting myself at this point.

If, as you say, you have the ability to pay off that vehicle loan, then I would recommend you do so and walk away.

The foreclosure shouldn't affect your credit score. What will affect your credit score is when your son gets a few judgments against him, someone freezes his bank account, and he's suddenly late with a (or a few) car payments. If you pay the loan off and he fails to repay you, you'll have to sue him.

You should also remove yourself from any other financial entanglements you have with him, for example a joint checking account.

 

[GrandmaOH]

Thanks single317dad, I wasn't aware of things like having his accounts frozen. I will tell him that so he is aware that could happen.

His car loan is the only thing held jointly. He does live with us, and helps with the farm in return. He has hopes of taking it over some day but has no financial interest in it at this time. He is not on our farm checking account, either.. I've made it clear that will not happen until all his debts are cleared up.