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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
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Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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As part of a divorce settlement agreement, I agreed to be responsible

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As part of a divorce settlement agreement, I agreed to be responsible for all debt with regard to the matrimonial home and I was to remove my ex from a home equity line of credit (note: the mortgage was in my name only). However, due to me being unemployed for over a year and still unable to get a job AND the house value being less than what is owed, I could not get the loan refinanced in order to remove her.

I've drained all of my retirement savings to keep up the house payments which I can no longer afford. I am now forced to declare bankruptcy because of my financial situation and the house will likely be foreclosed on. When that happens, the home equity loan lien holder could potentially go after her for a post-foreclosure deficiency of up to 114K+costs. They would not go after me because I'd be discharged from it by bankruptcy.

My question is...if my ex did indeed get a judgment against her by the home equity loan lien holder post-foreclosure, could she go after me for any of it even though I declared bankruptcy or do I need to ensure the bankruptcy includes having me be absolved from any potential obligations in the divorce settlement agreement?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 1 year ago.

Terry L. : Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.yes, she can enforce the hold harmless clause in the agreement
Terry L. : This would require you to pay for the 2nd or be in contempt of the decree
Terry L. : Unfortunately, not much you can do. Perhaps try a short sale? Maybe 2nd would agree to take less to close
Customer:

Couldn't I get absolved from this via bankruptcy by including any obligations from the divorce decree in it?

Terry L. : No, those are not dischargeable in bankruptcy
Terry L. : Tough situation. I would try short sale, otherwise you could keep paying 2nd mortgage after foreclosure, to pay balance to protect your ex
Customer:

I have no assets now and it wouldn't be worth her to go after me except being removed from an obligation to pay me a 48K equalization payment. Could she come after me in the future when my financial situation improves?

Terry L. : Otherwise, try the short sale, the 2nd may often write off a good chunk
Terry L. : She could get a judgment against you, garnish 15 percent of your wages, nab your tax refunds etc
Terry L. : She can always enforce the divorce decree if the creditor comes after her.
Terry L. : Obviously, you can see that she can be harmed if they sue, it will harm her credit too, she can fall back on the hold harmless clause to get you to still pay
Terry L. : Tough situation, I see this pretty frequently though in this real estate market
Customer:

So, the only solution to prevent any future headaches from this is a short sale?

Terry L. : Unless you can refi
Terry L. : Or keep paying that note
Customer:

ugh

Customer:

can't do any of those

Terry L. : Wish I had better options
Customer:

house is under water

Customer:

ok thanks

Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2539
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
Terry L. and other Bankruptcy Law Specialists are ready to help you
Customer: replied 1 year ago.

Canadian Bankruptcy process for notifying creditors

There is currently a loophole in Canadian law where divorce settlement payments can be discharged via bankruptcy as explained in this CBC article in 2011:
http://www.cbc.ca/news/canada/story/2011/07/14/supreme-court-divorce-decision.html

What's disconcerting is the affected spouse did not know her ex filed for bankruptcy and therefore could not act in a timely manner to fight for what was due to her in divorce.

In the US, you are required to notify your creditors directly when filing for bankruptcy so they when and where the hearing takes place.

What is the process/requirements for Canadian bankruptcies to contact creditors about these hearings?

Expert:  Terry L. replied 1 year ago.
Sorry, I am only licensed in US Federal court for bankruptcy work, I do not know Canadian bankruptcy law.
Customer: replied 1 year ago.

Sorry, I meant this to go out to a Canadian bankruptcy lawyer and not be a reply to your response.

Expert:  Terry L. replied 1 year ago.
no worries. best of luck

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