QUESTION
How do I protect a separated spouse's assets in bankruptcy?
Asked on Sep 10th, 2014 on Bankruptcy - Nebraska
More details to this question:
My husband and I have been separated but not divorced for almost 20 years. We have remained friends, filing taxes together to save money. He repaid me the small amount I contributed to our house and has been making payments on it alone all this time. Due to health problems and a period of unemployment, I have more credit card debt than I can possibly repay, even with consolidation. I was about to declare bankruptcy when I remembered that my name is still on his house. Is there anything I can do to prevent them from taking it from him in the liquidation? I read that filing a quit claim won't help. What if I divorce him now? Default instead of doing a bankruptcy? Suicide? Anything? Thank you!
9 ANSWERS
Be prepared to pay a very experienced attorney for his or her advice. Your question is fraught with issues, but they can be overcome.
Answered on Sep 15th, 2014 at 8:06 PM
Bankruptcy Law Attorney serving Austin, TX
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Law Office of Susan G. Taylor
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There's a question on the filing that covers the situation: Statement of Financial Affairs #14, I think, which discusses property held for another. Shouldn't present a problem.
Answered on Sep 15th, 2014 at 9:39 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Get a dissolution and give him your remaining interest in the house in the property settlement. The property settlement must specify that he made all of the payments for the house, the more detail the better. Ohio is a title state, so if your name is on the deed, it's presumed that you own 1/2 the house but if the actual facts are that he made all the payments that defeats the presumption. Then file for bankruptcy.
Answered on Sep 10th, 2014 at 8:42 PM
Is there any equity in the house? If not, no problem. If so, why not move back in with him during the time you file bankruptcy you can then claim the equity in the house as a homestead under the state laws. You ought to be meeting with a local bankruptcy attorney to discuss the particulars so that there are no hiccups in this process.
Answered on Sep 10th, 2014 at 8:39 PM
Deborah F. Bowinski
I know this is not what you are hoping to hear, but the answers vary with where you live and the practices in your jurisdiction. There is no substitute for hiring an attorney to give you personalized, reliable legal advice.
Answered on Sep 10th, 2014 at 8:37 PM
The answer to this question depends upon state law and how the homestead laws would protect him. It is possible that he would be protected but you need to consult a lawyer who is familiar with the exemptions in your state to determine the best course of action. It is too late for a divorce or quit claim to protect him at this point if you are on the verge of bankruptcy. By all means do not commit suicide. It's only money.
Answered on Sep 10th, 2014 at 8:31 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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See an attorney, the answers are going to be determined, in part, as to the State laws where you reside. Clearly you need counsel.
Answered on Sep 10th, 2014 at 8:27 PM
Derek W. Freeman
The answer to this question depends on a few things. In Colorado you are entitled to claim a homestead exemption of $60,000 ($90,000 if the house is occupied by an elderly or disabled spouse). So if the equity of the house is $60,000 or less, you don't have to worry about it. If the equity is greater than that amount, you will have to take some steps prior to filing bankruptcy.
Answered on Sep 10th, 2014 at 8:22 PM
Assets of your spouse generally do not become property of the bankruptcy estate (See the case In Re Everroad). However, from your statement, it appears that you may have a one-half legal interest in the real estate. Filing a quit claim deed would be considered a preference transfer or a fraudulent conveyance and make matters worse for you. A separation order for a District Court may solve the problem.
Answered on Sep 10th, 2014 at 8:19 PM