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 Posted: Wed Sep 24, 2008 11:32 am Subject: Debt Settlement or Bankruptcy? |
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Divorced August 1, 2008 in Washington State.
Awarded three debts ($34K total) in the divorce: two Lines of Credit and one credit card. I was never a joint owner on any of these debts which has been confirmed by the creditors. On the advice of my divorce attorney, I reluctantly took the debts because I received the majority of the assets (i.e. household furniture), my ex used the debts to pay the mortgage on the house (which we sold at a loss) and my ex has been unemployed for almost two years. My yearly income is approx. $40K; my ex was employed at $135K before being fired.
The financial institutions are willing to settle the debts for a reduced amount, say my portion is "paid as agreed," and charge off the remaining amounts. They say the charge off would show up on my ex-husband's credit report and be reported to the IRS against him not me.
To settle the debts I would need to borrow from family members as well as take out what remains in my IRA and/or 401K (not much). Plus, I have debts I incurred while separated (approx $21K) and my monthly budget is in the red each month.
My questions:
(1) Is it in my best interest to settle these debts (if I can come up with the money)? or file bankruptcy?
(2) Would my ex be able to get a judgment against me for not paying the full amounts despite the creditors agreeing to accept my settlement as "paid as agreed?"
(3) If the debts are discharged in a bankruptcy, can my ex still get a judgment against me?
(4) Can the debts show up on my credit report based on the divorce decree my ex provided the creditors? Currently, they are not on my credit report.
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ChrissieGirl
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| Posted: Wed Sep 24, 2008 11:54 am Subject: |
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| Quote: | | (1) Is it in my best interest to settle these debts (if I can come up with the money)? or file bankruptcy? |
You may want to consult with a bankruptcy attorney and see what he feels is in your best interest. I never suggest touching your retirement money to pay debts and most financial advisers will agree with me.
| Quote: | | (2) Would my ex be able to get a judgment against me for not paying the full amounts despite the creditors agreeing to accept my settlement as "paid as agreed?" |
If the account belongs to both you and your ex-husband than the creditor is supposed to get the ok from both of you to agree to a settlement. I am not a lawyer so as far as your ex being able to sue you , again you need to speak with a lawyer.
| Quote: | | (3) If the debts are discharged in a bankruptcy, can my ex still get a judgment against me? |
Your ex can`t sue you for filing for bankruptcy protection. The creditors will come after him for the debts that were also in his name because at that point you are no longer responsible for the debts included in the bankruptcy.
| Quote: | | (4) Can the debts show up on my credit report based on the divorce decree my ex provided the creditors? |
I am not sure on this one . Your lawyer can better answer that question or perhaps some one else here can better answer that question.
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mobile0311
Joined: 05 May 2008
Posts: 1350
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| Posted: Wed Sep 24, 2008 2:58 pm Subject: |
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I'm not sure of the answers to your questions, but I do think that I remember reading in some other post on this forum that creditors do not have to abide by a divorce decree, and that they still consider the accounts to be owned by the person who signed for the debt originally. So if that's true, then I think they are just willing to take whatever money you give them, but they may still go after your ex for the balance. As Mobile said, it might be best to consult an attorney.
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alias1958
Joined: 31 May 2008
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| Posted: Wed Sep 24, 2008 4:28 pm Subject: |
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Unless you can go Ch. 7 - Settling is a no brainer. That is if you can get the cash. I would not settle for anything more than 20-33%. If you are insolvent then do not worry about the Income tax part.
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BLL
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