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Ask Fritz Your Own Question

Fritz
Fritz, Attorney
Category: Bankruptcy Law
Satisfied Customers: 302
Experience:  Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases
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My estranged wife and I are in the process of getting a divorce.

Resolved Question:

My estranged wife and I are in the process of getting a divorce. Her name is XXXXX XXXXX deed of the house but we cosigned a HELOC. I want my name off of this debt, but the marital home is in negative equity due to the HELOC. If I had the court force her to refinance, I know that she won't be approved because she's not working. I don't think that she'll be willing to quit deed the house to me, so I am considering bankruptcy to get off of the equity line. The question is, would it be to my advantage to file bankruptcy before or after the divorce is finalized.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Fritz replied 1 year ago.

Fritz :

Hi, I'd like to help you with your bankruptcy questions this morning.


 

Customer:

Thank you

Fritz :

You may file bankruptcy before your divorce is finalized; however, it will likely be more time-consuming and expensive to do so.


 

Customer:

Thanks. So do you think this is my only option we can't refi and she won't quit deed the home to me?

Fritz :

Your divorce attorney and your bankruptcy attorney would have to communicate with each other during your case, which would not be cheap since they'd both be billing you for this time.


 

Fritz :

What is your goal? Do you ultimately want to keep the home or just want to walk away?


 

Customer:

I'll take either one. But if I walk away, I want to be completely free from it. She seems to think she'll take the home and stick me with half of the HELOC.

Customer:

I'd hate to ruin my credit, but I don't know if there is another option at this point.

Fritz :

"She seems to think she'll take the home and stick me with half of the HELOC." In that case, filing for bankruptcy might make sense, as you would otherwise be personally liable for any deficiency should the home be foreclosed upon.


 

Fritz :

You could wait and see at this point... if your wife takes the home and can somehow pay the mortgage and the HELOC, there's no need to file bankruptcy. I don't know what her personal financial situation looks like though.


 

Fritz :

She might also be able to obtain a loan modification that allows her to make the payments.


 

Customer:

It's not good. She's not working. I really don't want to be on that HELOC.

Customer:

But ultimately, if she tank

Customer:

s I guess I will too

Fritz :

If she's not working, it's unlikely she would be approved for a loan modification. Is the home currently in the foreclosure process?


 

Customer:

No, she's renting it out.

Customer:

But has indicated that once she loses homestead next year, she won't be doing well for keeping thinks going.

Fritz :

Do the rents cover the mortgage and HELOC?


 

Customer:

I don't know. She refuses to disclose that info.

Fritz :

Okay. It sounds like there may be issues down the line, but I think you have some time before the HELOC becomes a real issue as to you.


 

Fritz :

You may need to ultimately file for bankruptcy, but I'm not sure now would be the best time for you.


 

Customer:

so it may be best to wait on a bankruptcy? What if she files for one first?

Fritz :

That might necessitate you filing as well, because it would essentially dump the HELOC on you, but the timing really isn't a problem - the debt will be discharged no matter who files first.


 

Fritz :

(assuming you both end up filing)


 

Customer:

Okay, great. I'm sure more questions will surface later. But I'm still processing all of this. I don't have an attorney right now. I don't actually have money to pay upfront. Is there a way to hire an attorney without an upfront retainer. Also, she says I'll have to pay her attorney fees if I get one because she's not working and can't afford one. Is this true?

Fritz :

Is there a way to hire an attorney without an upfront retainer? Probably not, although if you were to file a Chapter 13, most of the attorney's fees would be paid through the Chapter 13 Plan.


 

Fritz :

I don't know your financial situation, so a Chapter 7 might be more appropriate. If that's the case, you'd probably need something like $1,000 to $1,500 upfront.


 

Fritz :

Also, she says I'll have to pay her attorney fees if I get one because she's not working and can't afford one. Completely false.


 

Customer:

Really?

Fritz :

A Chapter 13 would generally cost around $3,500, with maybe $1,500 paid upfront


 

Customer:

That is a surprise. She's used this to try to keep me from getting an attorney.

Fritz :

These prices may be a little higher or lower depending on where you live, but those were about the average price estimates I found online a few months ago from Florida attorneys who listed prices on their websites.

Customer:

So a bankruptcy would cost me about $3500 out of pocket?

Fritz :

I'm guessing she probably made that up to intimidate you into not hiring an attorney.


 

Customer:

Probably.

Fritz :

That's for a Chapter 13, in which a Debtor would make payments into a Chapter 13 Plan to a bankruptcy Trustee for 3-5 years.


 

Fritz :

A Chapter 7 would run somewhere more like $1,000 to $2,000, depending on who you hire and how complicated the case is.


 

Customer:

what is the difference between the two?

Fritz :

Chapter 7 is a debt liquidation for people who want a fresh start; Chapter 13 allows you to pay a portion of your debts over 3-5 years.

Fritz :

There are also income requirements... if you make a lot of money, you may be forced into a Chapter 13 if you want to file.


 

Customer:

Okay, so Chapter 13 would allow me to get back on the "saddle" sooner, say if I wanted to buy a home in the future?

Fritz :

Please keep in mind that this is VERY general advice, as a bankruptcy attorney literally needs to sit down with you and pore over your finances in order to determine which chapter to file.


 

Customer:

Okay, I understand. I appreciate it though.

Fritz :

Actually, it's more the other way around... Chapter 13 is more often for people who want to keep their home and some of their toys.


 

Fritz :

But just overspent or overspeculated on real estate, etc.


 

Customer:

oh but does ch 7 stay on your credit longer?

Fritz :

Chapter 7 is more about walking away - "I'm broke and can't pay the mortgage or credit card debt"


 

Fritz :

Although you can keep your home in Chapter 7 but would need to keep paying the mortgage


 

Customer:

gotcha.

Fritz :

I believe it's the same, both stay on your credit report for 10 years.


 

Customer:

Okay. Thank you so much for your help! You've been very helpful!

Fritz :

Chapter 7 would probably be easier to emerge from, as with a Chapter 13 you'd have a 3 or 5 year plan where you'd be pretty limited - creditors couldn't give you credit because you'd still be in an active bankruptcy.


 

Fritz :

Thank you, XXXXX XXXXX a great day!


 

Fritz, Attorney
Category: Bankruptcy Law
Satisfied Customers: 302
Experience: Florida attorney with extensive experience in Chapter 7 and Chapter 13 consumer bankruptcy cases
Fritz and other Bankruptcy Law Specialists are ready to help you

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