QUESTION
What would happen if there are two names on a loan and one files bankruptcy?
Asked on Oct 12th, 2013 on Bankruptcy - Michigan
More details to this question:
At the time of our divorce, my ex and I still had an outstanding home equity loan in both our names. She has since files for bankruptcy. Is her names just wiped off this loan and I am left on the hook for it? What are my options?
9 ANSWERS
General Law Attorney serving Cherry Hill, NJ
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Mark S. Cherry, Attorney at Law, PC
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You always were liable for the loan. You may be able to seek contribution even though there was a bankruptcy by enforcing your property settlement agreement if it covered you appropriately.
Answered on Oct 15th, 2013 at 6:23 AM
Consumer Bankruptcy Attorney serving Los Angeles, CA
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Orantes Law Firm
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Under the facts you describe, it does appear that you are still liable for the outstanding home equity loan balance while she is not, though the divorce order may have allocated such debt. You need to consult an expert bankruptcy attorney to review your divorce orders and otherwise determine if you are still liable. If counsel confirms that you are still liable, your options to resolve this are either to negotiate with the holder of the loan to pay some amount less than the full outstanding balance or file for bankruptcy relief. Of course, the foregoing assumes that you did not keep the real estate securing the home equity loan. If you did keep the home, you can file for Chapter 13 bankruptcy relief to eliminate it if it satisfies the requisites to eliminate it. Contact us at 213-389-4362 for a free initial in-person consultation.
Answered on Oct 15th, 2013 at 4:08 AM
Deborah F. Bowinski
You really should speak with your divorce lawyer if you had one, and or a bankruptcy lawyer to see what your rights might be. Depending upon what your separation agreement provides an depending upon which type of bankruptcy your ex filed, you may have some recourse against her. BUT in the meantime the lender is able to come after you for payment and/or foreclosure.
Answered on Oct 15th, 2013 at 3:56 AM
2 Awards
Yes, her liability to pay is discharged through bankruptcy. Yours is not. You can continue to pay the debt, or if you do not want to do so you need to negotiate with the creditor to come to a resolution or file bankruptcy yourself. If she took on the liability to pay in the divorce then potentially the debt is nondischargeable in bankruptcy. Whatever you pay the creditor to resolve the debt you can collect from her.
Answered on Oct 14th, 2013 at 2:21 PM
Yes, if your ex-wife filed bankruptcy and obtained her discharge, she has been relieved of her liability on that loan. If you file bankruptcy, you will also be relieved of that liability. However, the creditor will still have a lien on the home. In some circumstances, if you file Chapter 13 you can also strip that lien off the home.
Answered on Oct 14th, 2013 at 1:47 PM
You left out a couple of missing pieces of the puzzle, which is who has the property and is there any equity in it? If she has the property, the lien on the 2nd will remain and will tie up her interest in the property after the bankruptcy is over. While technically you will be solely responsible for paying this debt, as a practical matter, the lender may want to look to the property, not to you, for payment if there is equity in the property.
Answered on Oct 14th, 2013 at 1:30 PM
Bankruptcy Attorney serving Hampton, VA
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Haven Law Group, P.C.
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Yes, you would still be liable unless you choose to file bankruptcy, also.
Answered on Oct 14th, 2013 at 1:28 PM
The loan remains a liability against the house. So whoever has the house and wants to keep it going to have to pay the loan. But, that is probably what the divorce decree already provided. If this is a Texas home equity loan, neither of you are liable for the loan personally. You probably should see your divorce attorney for your options here.
Answered on Oct 14th, 2013 at 1:28 PM
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Yes you are alone on the debt. You owe it. See if you are eligible for bankruptcy?
Answered on Oct 14th, 2013 at 1:27 PM