middle of divorce and need to file bankruptcy

[msquestion]

What is the name of your state (only U.S. law)? Washington State
My sister is in the middle of the divorce with joint custody of 4 kids living with her. Has 60,000 in credit card debt since divorce inception august 2007. House is being sold, hopefully soon. Owe 300,000 on house and should sell for 350,000-400,000. Is it better to file for bankruptcy now or wait until after the divorce is final? What factors would help to determine the timing? Husband pays child support. All current debt is in her own name. She also owes my household 6,000. If creditors know house is for sale, will bankruptcy wait for this to sell an use profits for debt?
Thanks
Mel

 

[Ohiogal]

What is the name of your state (only U.S. law)? Washington State
My sister is in the middle of the divorce with joint custody of 4 kids living with her. Has 60,000 in credit card debt since divorce inception august 2007. House is being sold, hopefully soon. Owe 300,000 on house and should sell for 350,000-400,000. Is it better to file for bankruptcy now or wait until after the divorce is final? What factors would help to determine the timing? Husband pays child support. All current debt is in her own name. She also owes my household 6,000. If creditors know house is for sale, will bankruptcy wait for this to sell an use profits for debt?
Thanks
Mel

If in the midst of a divorce she cannot file for bankruptcy. That is simple. She needs to wait until the divorce is final. Any money achieved from the sell of the house that she receives will go towards debt. The 60k in credit card since divorce inception -- HOW did she get that much credit card debt? She will be paying that off. Is she working? If not she better start.

 

[mistoffolees]

What is the name of your state (only U.S. law)? Washington State
My sister is in the middle of the divorce with joint custody of 4 kids living with her. Has 60,000 in credit card debt since divorce inception august 2007. House is being sold, hopefully soon. Owe 300,000 on house and should sell for 350,000-400,000. Is it better to file for bankruptcy now or wait until after the divorce is final? What factors would help to determine the timing? Husband pays child support. All current debt is in her own name. She also owes my household 6,000. If creditors know house is for sale, will bankruptcy wait for this to sell an use profits for debt?
Thanks
Mel

If she owes $60 K in credit card debt and house is worth $50-100 K more than the mortgage, then it's not clear why she should be filing for bankruptcy anyway (even if she COULD).

Even if the home value is at the low end of that range and she doesn't have quite enough assets to cover the debt, she may well be better off just paying the debt rather than filing for bankruptcy - because of the damage that will due to her future ability to borrow.

 

[Ohiogal]

If she owes $60 K in credit card debt and house is worth $50-100 K more than the mortgage, then it's not clear why she should be filing for bankruptcy anyway (even if she COULD).

Even if the home value is at the low end of that range and she doesn't have quite enough assets to cover the debt, she may well be better off just paying the debt rather than filing for bankruptcy - because of the damage that will due to her future ability to borrow.

Actually she is only entitled to HALF the equity that accrued during the marriage (so think 25 to 50k). However if she incurred ALL of that debt since the inception of the divorce -- then she is responsible for ALL of it. Debt incurred since filing belongs to the person who got it. Hence she is responsible for all 60k of debt PLUS her portion of the marital debt.

 

[mistoffolees]

Actually she is only entitled to HALF the equity that accrued during the marriage (so think 25 to 50k). However if she incurred ALL of that debt since the inception of the divorce -- then she is responsible for ALL of it. Debt incurred since filing belongs to the person who got it. Hence she is responsible for all 60k of debt PLUS her portion of the marital debt.

OK. I didn't catch that. So she has half of the home equity ($25 - 50 K) and $60 K in debt. Unless there are no other assets at all, she's probably going to be much better off going to a credit counseling firm and working out the debt. She may be able to get the debt reduced, anyway.

 

[Ohiogal]

OK. I didn't catch that. So she has half of the home equity ($25 - 50 K) and $60 K in debt. Unless there are no other assets at all, she's probably going to be much better off going to a credit counseling firm and working out the debt. She may be able to get the debt reduced, anyway.

Depends on how she secured 60k in credit when she knew she was involved in a divorce. Did she count HIS income as her household income in order to get credit in order to rack up that much debt since the divorce was filed? If so a court is NOT going to be happy. And she could be facing charges for engaging in criminal fraud. She also will have problems in that half the marital debt will be her responsibility (60k plus half of whatever and who knows how much MARITAL debt there is). Also is she working? Does she have a job or is she a stay-at-home mom? If she was staying at home she better change that real quick. Also if she fraudulently obtained credit that can pose SEVERE consequences -- as in losing custody (if she is convicted) and being without child support as well. Should we continue?

Granted this is all based on what little has been posted but the OP hasn't really returned. Wonder why?