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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 03-23-2013, 10:02 AM
Dazed_and_confused Dazed_and_confused is offline
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Default Spouse filing for bankruptcy

Having just separated (which was a decision made by my wife alone), I have now been advised that she will be filing for bankruptcy. The 2 mortgages on it are in both our names and there is little equity in the house. Neither of us have much in the way of assets at this time, and I believe she is doing it to wipe out her student loans.

I am out of town visiting relatives to recover from the shock of being told it is over and I'm in need of some quick advice / information.

On my own I cannot come close to being able to afford the house. I am in the rare situation where she was the primary earner, even though both of us work FT. Can I simply surrender it, allowing it to be sold in the bankruptcy and hoping that the sale covers the mortgages (assuming that I would be responsible for 50% of any shortfall)? Or am I going to be forced into bankruptcy too?

Thanks in advance for any much needed guidance and advice.
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Old 03-23-2013, 10:14 AM
standing on the sidelines standing on the sidelines is offline
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maybe talk to the bank where you have your mortgage and see what they suggest.
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Old 03-23-2013, 11:01 AM
Desperate_Dad Desperate_Dad is offline
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I have great sympathy for your situation. The absolute first thing you should do is talk to a bankruptcy lawyer and explain your situation. They have a much greater intellect than a family court lawyer. You need to protect what assets you have left. This is not the USA where you can just give the keys to the bank and they take over the house. The banks will come after you for any shortfall. Bankruptcy has a stigma of being a bad thing but it is not necessarily so. It buys you time to get everything sorted out and can still live. They do not take all your assets but a bankruptcy trustee works with you and your creditors. Look them up on the internet immediately and they will advise you what your next steps should be.
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Old 03-23-2013, 11:12 AM
Mess Mess is offline
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Whose name is on the title? If it is joint, then what happens is, the trustee now has a claim for her share.

You would need to assert yourself with the trustee early. It's possible that the trustee may try to sieze the property for sale, even if just because of error or misunderstanding. It is best to communicate right away.

Your share of the home is your share. If you are still living in the home, you can put the trustee's share "on hold" (may take a court order but it is not unusual) so that the share can be paid off without selling the home.

If you live elsewhere, the courts may rather see that it is reasonable to require the home sold to pay the trustee. In which case, you would receive your share of the proceeds, or have the option of a buy-out.
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Old 03-23-2013, 11:12 AM
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hadenough hadenough is offline
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Do not "surrender" anything to anyone. No, her filing will not force you into Bankruptcy too. But it will affect you. How much so, will depend on the next moves you make to mitigate the damage.

You need to speak to a *reputable* trustee firm (many aren't, imo) and if you consult w/a lawyer make sure it is one that works in the area of law: Bankruptcy and Insolvency. I will PM you a firm (Trustee) that is very qualified to help you with your questions. It's *free* and there's no obligation for you to speak with them.

Last edited by hadenough; 03-23-2013 at 11:29 AM.
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Old 03-23-2013, 11:23 AM
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I would advise not saying one word to the Bank _ until he knows what he's going to do and has gathered info from a Trustee.
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Old 03-23-2013, 11:24 AM
mom2three mom2three is offline
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Something for you to think about (and perhaps bring to your spouses attention if you both can be amicable at this time) is that under the Bankruptcy and Insolvency Act, student loans cannot be discharged until seven years have lasped since being a full/part time student. It can be discharged after five years if the bankrupt can show 'undue hardship' and this is done on a case basis.

Whatever you do, do not do anything until you have consulted with a bankruptcy lawyer and a family law lawyer. And that includes discussing options with your spouse. You need to be aware of what your rights/obligations/options are under the law before making any decisions that can affect you.

Welcome to the boards!
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Old 03-23-2013, 11:31 AM
standing on the sidelines standing on the sidelines is offline
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try this site, they may have more ideas and suggested then here.

Bankruptcy Discussion Forum - Canadian
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Old 03-23-2013, 11:33 AM
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Please note that Bankruptcy Trustees are NOT lawyers. Many of them are CGA's or CA's - and many of them aren't.

They take a 3 year course (probably on-line). Some, imo are totally unqualified and unscrupulous and will steal the eyes out of your head, given the opportunity.
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Old 03-23-2013, 11:37 AM
Dazed_and_confused Dazed_and_confused is offline
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Thanks for the speedy replies. Both of our names are on the mortgages. Unfortunately I would think it is safe to say that things have become less than amicable, to put it mildly, which is not what I wanted. I did want the house to be sold as I'm sure she cannot afford it alone either. However, it was a bit of a surprise that she immediately went for the bankruptcy option. I'm fairly sure it is because that will make trouble for me.

I gather she has already discussed things with a trustee and probably has started the process. I'm wondering if the trustee has an obligation to contact me about the house? Like I said, I want it sold, but I don't want to get into a situation where I'm left holding the bag. My impression was that the trustee advised her to stop paying the mortgages and she would have 2 - 3 months before the bank seized it for foreclosure. To me, that is not dealing with the situation in a forthright manner.
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