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bankruptcy during divorce

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grandma2004

Junior Member
What is the name of your state? IL

My daughter is in the process of getting a divorce. She and her husband owe just under $10,000 in debt. They are very young, 21 years old. Her husband has decided to file bankruptcy, and has agreed to include her in it. She doesn't want to file, because she knows it will damage her credit. However, most of the debt they owe is his, such as medical bills from attempted suicide and a loan he took out before marriage, but while living together, to buy a truck. These debts will be his responsibility in the divorce decree.

If he files, and she refuses to be included, will the creditors then come after her for payment? She feels she has no choice but to include herself in the bankruptcy. If the creditors will come after her, is there anything she can do to prove she isn't responsible for his medical bills and his truck loan?

Thank you in advance for any help.
 


Ladynred

Senior Member
Ok. she does NOT have to file a joint bankruptcy with him ! She cannot be FORCED into bankruptcy, if she doesn't want to be included, then she needs to make that perfectly clear.

IL is NOT a community property state. Your daughter is NOT liable for ANY of HIS debts incurred during the marriage. If they had JOINT credit, the creditors WILL look to her for payment. If nothing is joint, she has no worries.

By the way, the divorce decree means NOTHING to creditors, it doesn't matter who the court 'assigns' debt to, the one who's name is on the account is the one the creditors will go after.

As for the medical bills during the mariage, if she didn't sign any papers saying she would be responsible for the bill, then she is NOT responsible for paying any of it.
 

grandma2004

Junior Member
Thank you for your reply, Ladynred.

I've been trying to find info on IL bankruptcy laws online, but not having a lot of luck finding info that addresses my daughter's particular problems. Can anyone recommend any sites?
 

grandma2004

Junior Member
OK another question:

In IL, my daughter's husband took out a loan at their credit union, in his name only, prior to marriage. After marriage, he had the note rewritten to borrow $1200 more, $500 of which was to pay for school for my daughter. She didn't attend school, because he quit his job a week after rewriting the note and they used the $ to live on until she moved out, then he removed the remaining $ from their account. When the note was rewritten, it was still only in his name. However, they had a joint checking and savings account at the credit union where the loan was taken. Can the credit union pursue payment from my daughter if her husband files bankruptcy on it, based on the fact that they had joint check and save accounts there?
 

Ladynred

Senior Member
First of all, bankruptcy law is FEDERAL, the only IL 'bankruptcy laws' you'll find are the exemptions available for the state. What EXACTLY is it you're looking for ? I can give you a link to the entire bankruptcy code, but it will take you some time to read thru it all ;)

He cannot FORCE her to file BK with him, if she doesn't want to file, then she does not have to, no matter what he may want. There is NOTHING in the BK law that says a married couple must file together.

Can the credit union pursue payment from my daughter if her husband files bankruptcy on it, based on the fact that they had joint check and save accounts there?
Payment for WHAT ??? The loan that was in HIS NAME ??

Absolutely NOT ! The joint checking and savings has NOTHING to do with his debt or his bankruptcy filing.. except that he may have to show where that money went.

Married people in IL are NOT respsonsible for each other's debts, eveything is kept completly separate. Your daughter can NOT be held liable for any of HIS debts, it doesn't matter whether he incurred the debt during the marriage or not.
 

grandma2004

Junior Member
Thanks again, Ladynred.

My daughter called her divorce attorney today. She was told that the creditors WILL come after her if she doesn't file and he does. She will have to pay all of the debts incurred during the marriage, including those that are only in his name, then she will have to take him to court to get some of her money back. However, she probably won't be able to get $ from him because he is filing bankruptcy on all of it. Also, the divorce lawyer won't request a court date, to have a judge settle remaining divorce issues, until the bankruptcy has been filed and is finished. My daughter needs a judge to settle remaining issues because her husband has said he WILL NOT sign divorce papers, because he doesn't want a divorce. He cheated on her, was mentally and physically cruel to her, he attempted suicide, and endangered their 19 month old son on at least 2 occasions. But he doesn't want a divorce.

I think I'll call a bankruptcy attorney tomorrow. There has got to be something she can do to avoid ruining her credit.

Again, thank you.

Grandma2004
 

Ladynred

Senior Member
She was told that the creditors WILL come after her if she doesn't file and he does. She will have to pay all of the debts incurred during the marriage, including those that are only in his name,
I'm sorry, but that is just WRONG. IN is NOT a community property state and she is NOT LIABLE for HIS DEBTS as long as her name is not on any of them !

Now, the divorce court could 'assign' each of them a portion of the marital debts, but there is NOTHING in a divorce decree that is binding on a creditor. As far as a creditor is concerned, if her name's not on the debt, she's not liable. The 'equitable distribution' of marital assets - and debts, is most likely what the divorce lawyer was talking about.


Also, the divorce lawyer won't request a court date, to have a judge settle remaining divorce issues, until the bankruptcy has been filed and is finished
Actually, that could be a problem. The Trustee may not go forward with the bankrutpcy because the division of marital property is not finalized. The divorce can hold up the bankruptcy and vice versa.
 

pojo2

Senior Member
You are telling us things here that are very relevant issues, if however, your daughter has told the Atty she spoke with differently than your understanding, then the Atty could be right.

So when calling people to get advice it might be best if she did it will all the revelant info than if you did based on your understandings.

Not faulting that you care but the exact details are very important in any advice given here.

Now tell your daughter to get a FREE copy of her credit report and see how any of this might be on her credit report already and needs to be removed IF everything is as YOU understand it. She can get that online and hopefully someone will have the link to the OFFICIAL free report.
 

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