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My brothers wife has filed for divorce. She also filed for

My brother's wife has filed...
My brother's wife has filed for divorce. She also filed for Chapter 13 bankruptcy during the pendency of the divorce. While married but prior to filing for divorce & prior to her filing bankruptcy, they purchased a house and have a mortgage. They are each on the note for the mortgage. She is living in the house. At the time of bankruptcy, the mortgage was 4 months in arrears ($2000). Can the wife be relieved of her obligation to pay on the note because of filing bankruptcy and the husband be fully liable for the monthly mortgage payments yet the wife be allowed to live in house? What can my brother do to protect himself. His wife lied on her bankruptcy forms swearing that she wasn't married and had no codebtors. Will these lies make a difference? House is in Texas as is the divorce. Thank you .
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Answered in 31 minutes by:
4/6/2013
Roger
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31,797
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Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question.

IF she filed chapter 13 bankruptcy, then his wife will not be discharged of any of her debts. Instead, a chapter 13 is a reorganization of debt, which would still require her to pay all debts - - including the mortgage. Thus, it's not likely that she will be reliever of her obligation as long as she's in chapter 13. If she were to file for chapter 7, she could be relieved of the debt and obligation to pay.

Also, who gets the house is a matter for the divorce court to decide. Usually, the court will award the house to one spouse, but the court will require the spouse receiving the house to buy out the other one. So, if she were to keep the house, the court would likely require her to assume the mortgage and relieve him of his obligation to pay.

Your brother shouldn't expect to have her receive the house in the divorce and he be required to pay the mortgage. That's not a likely result.

Also, if she lied to the bankruptcy court and claimed not to be married and had no joint debts, the bankruptcy court could throw out her bankruptcy or make her re-file. Her husband would have to file a motion in bankruptcy challenging the content of her petition.
Roger
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Customer reply replied 4 years ago
Thanks for your response. In looking at the Chpt 13 plan, it appears the court has ordered that a portion of the past due amounts on the mortgage are to be paid but not the entire amount of past due. Going forward, the each months mortgage must be paid in full. Is my brother responsible for the past amounts which aren't paid? In other words, does the Court order only requiring the wife to pay a portion of past due extinguish the remainder of past due or can lender come after my brother for those amounts? Thanks
Hi -

The bankruptcy court's order relieving his wife of the obligation to pay the past due amounts would only relieve HER of the debt.

Thus, the debt is still due and owing, and would have to be paid by him in order to bring the loan current.
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Customer reply replied 4 years ago
That makes sense. Now, she is living in house and wants house in the divorce. If the court awards her house in divorce, shouldn't she have to pay husband as damages the past amount of mortgage which he"s liable to lender? It just doesn't seem fair for the lender to sue my brother for amounts due on a house he doesn't live. Am I missing something? thanks
No, I think you're right that IF the court awards her the house, then she will have to buy out his equity and should be required to pay the mortgage.

HOWEVER, the divorce court cannot terminate your brother's obligation to pay the note/mortgage because the lender's rights can't be taken away, but the court can provide your brother with the right to sue or seek indemnification from her if she defaulted and he was required to pay. Also, he could ask the court to require her to refinance in her name alone to take him off of the loan within 1-2 years of the divorce being final. HOWEVER, with her being in bankruptcy, this may be very hard for her to do.

These are things the divorce court will address, BUT he should have the right to be paid his equity in the house in addition to her having to pick up and pay the mortgage.
Roger
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Category: Bankruptcy Law
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Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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