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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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bankruptcy, spouse denied any claim to former residence that

Customer Question

bankruptcy, spouse denied any claim to former residence that she had vacated and where husband was still living. 3 years later, a divorce items was included directing the husband to split the proceeds of this same residence with the spouse who had previously renounced in bankruptcy. Arkansas law.
Can the spouse still lay claim to half of proceeds after sale of the house.
If the answer is yes she has claim to half, then, if the house is sold for less than what is owed on it, is she liable for half the shortfall. Thanx
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 4 years ago.

Hi JACustomer,

Does the divorce decree say the ex-spouse is liable for any shortfall?

Customer: replied 4 years ago.
The divorce decree only says that she is to get half of the proceeds upon sale. It ways nothing about shortfalls.
Expert:  cfortunato replied 4 years ago.

1) The spouse who filed a Bankruptcy is entitled to 1/2 of the proceeds from the sale of the house, pursuant to the divorce decree. This is because divorce proceedings are expressly not affected by a Bankruptcy filing. Bankruptcy Stat. 362(a)(2).

2) No - the spouse who filed the Bankruptcy cannot be held liable for any shortfall. However, if there is a mortgage, the house cannot be sold for less than the balance of the mortgage, unless the mortgage company approves the sale (called a short sale), which can result in a forgiveness of the liability for the short sale for both parties.

I think this is what you wanted to know. If not, please let me know.
Thank you.

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