Has your spouse filed for bankruptcy while you were separated or while a divorce was pending? Months or years may pass before you and your spouse finalize living arrangements, but failing to evaluate joint financial debt may come back to haunt you.
This personal bankruptcy story was posted on the internet in March of 2011, “I am currently separated from my cheating soon-to-be-ex-husband. He kicked me out in January 2011, and I now live on my own and he lives in our home. He hasn’t made a mortgage payment nor payment on the second [mortgage] since November 2010. Since he has stopped paying the mortgages, the house is in foreclosure. I have had to come up with a huge security deposit with the utility company so I can have electricity and gas and it’s because of the foreclosure. My credit was perfect up until the foreclosure. Will the banks come after me or garnish my wages as my ex husband has been stating to me in his threatening emails? I’m really worried that creditors will come after me now.”
The debtor in this personal bankruptcy illustration is worried her husband’s creditors may come after her. Although the threats may be ove stated, if the wife’s name is on the mortgage loan, any credit cards, or even the utilities , she could legally be held responsible for paying the bills if her husband defaults. If the creditors file a court case and they are successful in the court proceedings and the couple lives in a state where garnishment of wages is legal, the wife could potentially have her wages garnished.
So can the banks come after her if she is jointly named on any of the debts owed? Yes, they can. They can also garnish her wages, if garnishment is legal in the state in which she resides, and the creditor obtains a court judgment for garnishment. What should she do now to protect herself against these possibilities? First, if she is serious about divorce, she should hire a divorce attorney to help her with any legal questions. Secondly, if she wants to prevent foreclosure, garnishment, or collection activities, she should hire a bankruptcy attorney to investigate whether or not she needs bankruptcy protection.
One of the advantages of filing for bankruptcy protection is the automatic stay. The automatic stay allows a judge to order all collection actions to cease. All types of bankruptcy filings allow an automatic stay which will stop certain lawsuits, foreclosures, utility shut-offs, evictions, repossessions, garnishments, attachments, and debt collection harassment. Following a bankruptcy filing, all creditors will have to go through the United States Bankruptcy Court trustee in order to deal with their debtors.
Like the debtor in our illustration, you may also be in a position where you are separated but continue to have joint financial responsibilities or debts with your spouse. If you are concerned about these debts and you are filing for divorce, seek out a divorce and bankruptcy attorney who can help answer your questions. If you live in or around the metropolitan area of Sacramento, California, contact us today. We will help you find a bankruptcy and/or divorce attorney in your area who can answer your bankruptcy questions
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