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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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My husband and his ex wife incurred a lot of debt ($300,000)

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My husband and his ex wife incurred a lot of debt ($300,000) during there marriage from a mortgage suit after a short sale and credit cards. After knowing of this debt his ex received a ($200,000+) settlement from a personal injury lawsuit settlement in 12/11. They divorced in 12/11 and he received $50,000 from that settlement money which he paid back to his mother. They are both about to file for bankruptcy separately. She has since spent all of her portion from the settlement, none on any debt, very careful to not make a paper trail. She will not say on what, but she has lived large, traveling etc, and if my husband ever owes her money he can not pay with a check, it has to be cash. She has told my husband to not mention one word about the money he received from the injury settlement to his bk atty. We read online that since it has been a year since he paid his mom that there is no reason he shouldn't list that money as an asset. She insists that it is not necessary so why would he list it. We think she does not want him to disclose that money because it may lead to her settlement being revealed from which she has nothing left.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 1 year ago.

cfortunato :

Hi - my name is XXXXX XXXXX X'X a Bankruptcy attorney here to assist you.

Customer: Ok
cfortunato :

Was the $50,000 paid to your husband's mother money owed to his mother, or was it a gift?

Customer: Owed to his mother
cfortunato :

Then it is correct that the Bankruptcy court could not take that money back after one year. (It would have been 2 years if the $50,000 was a ''gift'

cfortunato :

', and not a loan repayment.)

Customer: My question tho is his ex wife is begging him not to disclose that he ever received that money to an atty. wouldn't that potentially be fraud?
Customer: We are concerned that she could be in violation of the court for not disclosing a large settlement received after incurring the debt. We are concerned for the welfare of his 10 year old who lives with her. We don't want her to break the law.
cfortunato :

It is not necessary to disclose the receipt of money the debtor no longer has.

Customer: How long after receiving a settlement do you have before filing bk. does it matter that the debt was incurred before the settlement money was received. Is she in violation of the court by not disclosing a large settlement because she spent it!
Customer: Should my husband not disclose the money he received and then paid back to his mom?
cfortunato :

It does not matter the settlement money was received after the debt was incurred. Additionally, the Bankruptcy court only wants to know about lawsuits that were in progress one year or less before the Bankruptcy was filed.

cfortunato :

The debtor is asked if there were any loan repayments to family members within one year before filing, and if there were any gifts made to family members in the 2 years before filing.

cfortunato :

In other words, the lookback period is one year or two years - no longer.

Customer: So someone can bankrupt debts after receiving a lot of money if they just spend it all.
cfortunato :

Yes.

Customer: Nice. Thanks.
cfortunato :

If the creditors do not find out about the money before it is spent (so they can attach it), there in nothing they can do - unless the money is spent on something the debtyor still as - such as a car.

cfortunato :

You're welcome!

Customer: I guess it seemed suspect bc she was emphatic he not mention that money
cfortunato :

She may be worried that she will not be able to prove that she no longer has the money.

cfortunato :

However, since the settlement was received more than one year ago, that settlement is not something the Bankruptcy court can look at, unless she gifted more than $200 to any family member less than 2 years before she files a Bankruptcy.

Customer: She is not disclosing that she ever received the money to the bk court
cfortunato :

I am trying to explain that she may not have to.

Customer: Ok thanks.
cfortunato :

You're welcome!

cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
cfortunato and other Bankruptcy Law Specialists are ready to help you

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