Posts Tagged ‘divorce’

Question: I am currently looking at personal bankruptcy due to large unsurmountable personal debt. I am anxious to get the process started but am also in the midst on a divorce trial commencing within the next month. My question is: If I start the banruptcy process now and find during my divorce trial that I owe a equalization payment, can that be included in my bankruptcy? Essentially, if it is found that I owe this payment it would be based on assets as of the valuation date (October 2004) that do not exist now.

Answer: In most cases the answer is yes, equalization payments are a debt that is included in bankruptcy. However, in divorce proceedings there are many factors that may change that answer.

For example, court ordered support payments are not discharged in a bankruptcy. The wording of the eventual court order will therefore determine what can be discharged in a bankruptcy, and what can’t.

This is a very complex legal matter, so you should discuss this in detail with your lawyer and a bankruptcy trustee before you decide whether or not bankruptcy is the correct option for you.

Question: my ex husband filed bankruptcy last week only one week after turning the title of the house over to me. Will i be effected?

Answer: It depends on a number of factors. Your ex-husband’s trustee must investigate all real estate transfers over the past five years. The first issue will be whether or not there was any equity in the house at the time of the transfer. If the value of the house was about the same as the amount owing on the mortgage, there was no equity, so it should not be an issue.

If the house did have equity, the trustee will then investigate why the house was transferred to you. If you had a legal separation agreement where you were to receive the house, it is likely that you will not be effected.

As this is a complicated area of law, we suggested you contact your divorce lawyer to review your situation and advise you on how to protect yourself in this situation.