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Category: Bankruptcy Law
Satisfied Customers: 17252
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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One of my husbands LLCs filed Ch. 7 bankruptcy in NY, Jan

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One of my husband's LLC's filed Ch. 7 bankruptcy in NY, Jan 2008. I just received a summons as a named defendant. We were married at the time that he wrote 4 checks to my name ($38,000). We were divorced in 2006 and the divorce settlement agreement states that I am to be held harmless from all past, present and future debts, known or unknown, related in any form, to my X husband. Will the divorce decree stand up?
THis could be serious, but he would be responsible for the debts in most cases, if the Court finds the transactions were fraudulant he would be made responsible not you. The divorce decree is important and you need to show the Court the waiver of liability, unless you purchased property that can be collected with the money, he would be the party made to pay it back. Also, consider a bankruptcy attorney coming with you to Court.
Customer: replied 7 years ago.
Thank you so much for giving your time and expertise to this site. I have found a lawyer through my account. He only seems to be interested in the retainer, Oh well.
I spent a great deal of time working out that divorce agreement. At the time, I was afraid that maybe it was a "Madoff" (sp?) thing. A poncy thing, whatever, Things just did not add up. Turns out that the judge is the same one that tried Madoff.

Ok, I am digressing. I guess the thing I want to know is this: Does a Divorce Settlement Agreement (which is spelled out in minutia) stand up over a bankruptcy? or does it turn out that it was one of his LLC s that is in bankruptcy and I will then have to find the money to sue him to recover?

Is there a way out of this that will spare me the misery? I do own property. I do make money. I do wish this would go away. By the way, I am innocent of everything except the fact that I married the guy.

At the actual divorce proceeding, the judge and I had a meeting. She did advise me to "just let it go." She did tell me that he had enormous debts. I had no idea about that.
The divorce decree does have bearing in Court, the issue the Bankruptcy Court would have to weigh is if that money was given to you with the intent to hide assets from his creditors. That is complicated, and a hard argument to make without significant evidence and your testimony is required proabably for that reason. I would not go without an attorney. If they do not have evidence of fraud they would allow you the money.
Customer: replied 7 years ago.
Thank you for your very prompt reply. I am very impressed.

That question did come up "hiding money" and I must say, that one never did occur to me. In fact, I do keep a journal, which I am sure the court would never allow as anything except "hearsay" but in my journal I did write about my mother's death, the money I inherited and the fact that I did (very stupidly) lend $30,000 to my x-husband. I remember thinking it was a "save our marriage loan." I think that the check(s) he wrote to me for that amount was a repayment of the loan. Problem is, I don't seem to be able to prove it at this point ... only in my journal. He wrote the repayment checks form the LLC account (I did not notice at the time) He is a rather well known NYC CPA.
This is getting complicated isn't it?

OK, I was not hiding money, that is not the case. In fact, once he repaid me, I went on to put in two bathrooms (we needed them).

I tried very hard to make the divorce agreement stringent. I wonder which is more important in the eyes of the law ... divorce or bankruptcy? I am trying to be informed. I am hoping that my life will not be encumbered by a guy that should have no further influence on me and how I live.

Wow, hope you can tackle that. Thanks, Diane
The new bankruptcy law made non-support obligations from a divorce or separation non-dischargeable in a chapter 7 bankruptcy if the discharge of the obligation would harm the spouse to whom the obligation is owed more than it would harm the person who owes it, your ex-spouse. 11 U.S.C. 523(a)(15). A debt that is non-dischargeable means that your ex-spouse is still responsible for it.

A divorce decree is given great weight, so the evidence they have has to be very high.
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Customer: replied 7 years ago.
Thank you, XXXXX XXXXX I wish there were a way to let you know how this turns out. I pray you are right. I really never knew this would happen, then again, when it came right down to the last ink drying on the divorce agreement, I did my best to protect my future. We shall see.

Thank you for giving me your advice and for giving it to so many others. All of us need a direction