What would happen if there are two names on a loan and one files bankruptcy? 20 Answers as of October 17, 2013

At the time of our divorce, my ex and I still had an outstanding home equity loan in both our names. She has since files for bankruptcy. Is her names just wiped off this loan and I am left on the hook for it? What are my options?

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Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
The other is stuck with the debt that is why banks get co-signers.
Answer Applies to: California
Replied: 10/17/2013
Charles R. Chesnutt, P.C.
Charles R. Chesnutt, P.C. | Charles R. Chesnutt
Assuming that her bk was done correctly, her obligation on the note was discharged (wiped away). However, the lender most probably retained its lien against the home, so the lender can foreclose if the note is not paid by someone.
Answer Applies to: Texas
Replied: 10/17/2013
McMahan Law Firm
McMahan Law Firm | Van D. McMahan
This is a problem often encountered with divorces and settlements of debts and assets. You are still responsible for the loan regardless of whether you ex-wife is or not. You didn't mention who got the home during the divorce. If she got the home you could file a petition with the divorce court and ask that the home be placed in your name since you are having to pay for it alone. The other option may be to file your own bankruptcy petition. I would also check with your attorney that handled your divorce to determine whether the awarding of the home was some type of alimony payment. That could affect the bankruptcy court's decision concerning the home.
Answer Applies to: Tennessee
Replied: 10/15/2013
Mark S Cherry, Attorney at Law, PC
Mark S Cherry, Attorney at Law, PC | Mark Cherry
You always were liable for the loan. You may be able to seek contribution even though there was a bankruptcy by enforcing your property settlement agreement if it covered you appropriately.
Answer Applies to: New Jersey
Replied: 10/15/2013
Danville Law Group | Scott Jordan
Yes, you become solely responsible for the loan. Who lives in the house that the HELOC is attached to? If you do, your options are to continue paying the loan or stop making the payments and risk foreclosure. Is your house worth more than the first mortgage loan? If not, a Chapter 13 bankruptcy might be able to remove the HELOC loan in full.
Answer Applies to: California
Replied: 10/15/2013
    Law Offices of Linda Rose Fessler | Linda Fessler
    Yes, you are still on the hook for this.
    Answer Applies to: California
    Replied: 10/15/2013
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    Your ex-wife would have discharged her responsibility for the mortgage and you would be responsible for it by yourself. You could try and settle with home equity company, or depending on your circumstances, you might need to go bankrupt yourself if they start trying to collect from you or garnish your wages or state tax refund.
    Answer Applies to: Michigan
    Replied: 10/15/2013
    Law Office of Shawn N. Wright | Shawn N. Wright
    I would need more details from you in order to adequately answer this question. What has happened with the house you refer to? Has there been a foreclosure and has the mortgage company (either for the primary mortgage or the home equity lender) taken back the property through a sheriff's sale. If this is a Pennsylvania property, then mortgage companies have only 6 months from the date of the sheriff's sale to file a petition for a deficiency judgment. A deficiency is the amount of money still owed on the mortgages after the sheriff's sale funds or sale funds have been applied to the loan. In this situation, your ex-wife has filed for bankruptcy and presumably has obtained her bankruptcy discharge order that wipes out her personal liability for this debt. So, yes, you would be on the hook, but I don't know the answers to the questions that I've raised above, so I can't provide all the answers for you.
    Answer Applies to: Pennsylvania
    Replied: 10/15/2013
    Stuart P Gelberg
    Stuart P Gelberg | Stuart P Gelberg
    You're already on the hook for it. Your deal with your ex has nothing to do with your deal with the mtgee.
    Answer Applies to: New York
    Replied: 10/15/2013
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    Under the facts you describe, it does appear that you are still liable for the outstanding home equity loan balance while she is not, though the divorce order may have allocated such debt. You need to consult an expert bankruptcy attorney to review your divorce orders and otherwise determine if you are still liable. If counsel confirms that you are still liable, your options to resolve this are either to negotiate with the holder of the loan to pay some amount less than the full outstanding balance or file for bankruptcy relief. Of course, the foregoing assumes that you did not keep the real estate securing the home equity loan. If you did keep the home, you can file for Chapter 13 bankruptcy relief to eliminate it if it satisfies the requisites to eliminate it. Contact us at 213-389-4362 for a free initial in-person consultation.
    Answer Applies to: California
    Replied: 10/15/2013
    Law Office of Barry R. Levine | Barry R. Levine, Esq.
    Yes. Speak with a bankruptcy attorney.
    Answer Applies to: Massachusetts
    Replied: 10/15/2013
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    Yes, her liability to pay is discharged through bankruptcy. Yours is not. You can continue to pay the debt, or if you do not want to do so you need to negotiate with the creditor to come to a resolution or file bankruptcy yourself. If she took on the liability to pay in the divorce then potentially the debt is nondischargeable in bankruptcy. Whatever you pay the creditor to resolve the debt you can collect from her.
    Answer Applies to: Nevada
    Replied: 10/14/2013
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    You really should speak with your divorce lawyer if you had one, and or a bankruptcy lawyer to see what your rights might be. Depending upon what your separation agreement provides an depending upon which type of bankruptcy your ex filed, you may have some recourse against her. BUT in the meantime the lender is able to come after you for payment and/or foreclosure.
    Answer Applies to: Colorado
    Replied: 10/15/2013
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    Yes, she is off, you are still liable and you may want to think of bankruptcy as well to get your liability off. The house will still secure that loan though.
    Answer Applies to: New York
    Replied: 10/14/2013
    Portland Bankruptcy Law Group
    Portland Bankruptcy Law Group | Christopher J. Kane
    Yes, if your ex-wife filed bankruptcy and obtained her discharge, she has been relieved of her liability on that loan. If you file bankruptcy, you will also be relieved of that liability. However, the creditor will still have a lien on the home. In some circumstances, if you file Chapter 13 you can also strip that lien off the home.
    Answer Applies to: Oregon
    Replied: 10/14/2013
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    Depends on divorce decree, but normally both people are obligated and therefore you would be on the hook for the debt.
    Answer Applies to: Florida
    Replied: 10/14/2013
    Armstrong Kellett Bartholow P.C.
    Armstrong Kellett Bartholow P.C. | Gary Armstrong
    The loan remains a liability against the house. So whoever has the house and wants to keep it going to have to pay the loan. But, that is probably what the divorce decree already provided. If this is a Texas home equity loan, neither of you are liable for the loan personally. You probably should see your divorce attorney for your options here.
    Answer Applies to: Texas
    Replied: 10/14/2013
    Philip R. Boardman, Attorney at Law
    Philip R. Boardman, Attorney at Law | Phil Boardman
    Yes, you would still be liable unless you choose to file bankruptcy, also.
    Answer Applies to: Virginia
    Replied: 10/14/2013
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    You left out a couple of missing pieces of the puzzle, which is who has the property and is there any equity in it? If she has the property, the lien on the 2nd will remain and will tie up her interest in the property after the bankruptcy is over. While technically you will be solely responsible for paying this debt, as a practical matter, the lender may want to look to the property, not to you, for payment if there is equity in the property.
    Answer Applies to: Nevada
    Replied: 10/14/2013
    Charles Schneider, P.C.
    Charles Schneider, P.C. | Charles J. Schneider
    Yes you are alone on the debt. You owe it. See if you are eligible for bankruptcy?
    Answer Applies to: Michigan
    Replied: 10/14/2013
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