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  1. #1
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    Apr 2018
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    Default Bankruptcy Due to Debt Incurred by One Spouse

    My question involves bankruptcy in the state of: Indiana

    Hi, I had a few questions but first the background. My husband came to me about 3 weeks ago and admitted that he had been hiding several maxed out credit cards and loans from me. Lets not even get into how mad I am at him and frustrated with the situation. I am preparing to finish nursing school in December with minimal student loans as I have been paying my way through at a community college, I am meeting for mediation on May 17th to settle a case from nearly 5 years ago on a car accident that required me to have orthopedic surgery, and I also have one of our childrens college accounts in my name. He had our other childs college account, but cleaned it out.

    I am using our tax return to restart our daughters college account. I am concerned with protecting my settlement, my childrens college accounts, our house which is in his name and anything else I should be aware of. The kids college accounts are in savings accounts and both will be in my name, but we also have access to each others savings accounts, if that makes sense. I am hoping to move them into something more productive this summer, but my lack of knowledge about finances is really holding me back.

    So the questions, should he file for bankruptcy before my mediation?
    Will the kids savings accounts be safe if they are in my name, but his checking is linked to them?
    Will our house be safe?
    Can he absorb some of my credit card debt, there's not a lot, before he sees the lawyer?
    This question is just to settle a disagreement between me and my husband, can the lawyer advise him to absorb some of my debt?
    Is there any way this will affect my credit score?
    Anything else I should know or advise?

    Anything is greatly appreciated, thanks!

  2. #2
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    Oct 2006
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    Default Re: What Can We Do with Our Bankruptcy

    No account will be safe if it has his name in any way attached to it or any of his accounts linked to it. If you want to protect yours and the children's accounts he cannot be attached or linked in any way.

    Any other asset with his name on it (house, car) would not be safe either.

    Make sure that your settlement goes into an account that he has zero access to. Make sure that he has no access of any kind to the children's accounts as well.

  3. #3
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    Default Re: Banrkuptcy Due to Debt Incurred by One Spouse

    Even if the plan is for your husband to file bankruptcy individually, not for you and he to file as a married couple, the extent to which your income or assets in your name could potentially be reached to satisfy his debts is something that he needs to discuss with his bankruptcy lawyer.

    Bankruptcy is not supposed to be a shell game, in which you shift cash from him to you, and shift debt from you to him, thereby minimizing the recovery available to creditors. Attempting such shifts can be a dangerous game, as a mistake can cause a transfer to be deemed fraudulent and cost you your ability to exempt it from the bankrupt estate.

  4. #4
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    Default Re: Banrkuptcy Due to Debt Incurred by One Spouse

    Quote Quoting Mr. Knowitall
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    Even if the plan is for your husband to file bankruptcy individually, not for you and he to file as a married couple, the extent to which your income or assets in your name could potentially be reached to satisfy his debts is something that he needs to discuss with his bankruptcy lawyer.

    Bankruptcy is not supposed to be a shell game, in which you shift cash from him to you, and shift debt from you to him, thereby minimizing the recovery available to creditors. Attempting such shifts can be a dangerous game, as a mistake can cause a transfer to be deemed fraudulent and cost you your ability to exempt it from the bankrupt estate.
    While that is true, its neither a shell game nor illegal to make sure that the children's assets and the other spouses separate assets (the settlement) are kept separate.

  5. #5
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    Default Re: Bankruptcy Due to Debt Incurred by One Spouse

    This:
    Quote Quoting aquila2883
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    Can he absorb some of my credit card debt, there's not a lot, before he sees the lawyer?... can the lawyer advise him to absorb some of my debt?

  6. #6
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    Default Re: Bankruptcy Due to Debt Incurred by One Spouse

    Quote Quoting Mr. Knowitall
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    This:
    I do not think that anybody disagrees with that...and you were the only person to address it.

  7. #7
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    Apr 2018
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    Default Re: Bankruptcy Due to Debt Incurred by One Spouse

    Thanks everyone!

    The question about shifting debt was more for my husband as he thought that is something the bankruptcy lawyer would do. Personally, it sounded like a lot of risk and potentially illegal to me. Why take such a risk when my debt is minimal and completely manageable?

    As for my childrens college accounts. My parents have offered to take charge of the accounts for a time. I know that I need to do something with this money such as invest, place in an appropriate fund etc etc. I am completely clueless when it comes to finances beyond managing bills so pardon me trying to communicate this with my lack of knowledge. My question is, if I invest this money in a state college fund or something of the sort, will it be safe? Would it be wiser to just let my parents hold onto the money until after the bankruptcy?

    When my husband consults with a bankrupcty attorney, at what point are we "locked" in? Is it once he/she sees our finances or can they advise us on ways to protect the kids finances, our house etc etc before he actually files? He needs to go have a consultation, but I also want to make sure our ducks are in a row as well.

  8. #8
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    Default Re: Bankruptcy Due to Debt Incurred by One Spouse

    I am using our tax return to restart our daughters college account.
    OUR tax return means it’s also his money. That makes it accessible to the trustee. Before doing anything he needs to speak with the bk attorney.
    Would it be wiser to just let my parents hold onto the money until after the bankruptcy?
    do you mean like in illegally hiding money the trustee should have access to? No. Don’t involve your parents in illegal schemes.

    When my husband consults with a bankrupcty attorney, at what point are we "locked" in?
    depending on what finances you are speakingof in particular, he is locked in either 90 days or 1 year prior to filing.


    He needs to discuss his options with the attorney before he does anything foolish and risks bankruptcy being denied due to fraudulent actions.



  9. #9
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    Oct 2006
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    Default Re: Bankruptcy Due to Debt Incurred by One Spouse

    Quote Quoting aquila2883
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    Thanks everyone!

    The question about shifting debt was more for my husband as he thought that is something the bankruptcy lawyer would do. Personally, it sounded like a lot of risk and potentially illegal to me. Why take such a risk when my debt is minimal and completely manageable?

    As for my childrens college accounts. My parents have offered to take charge of the accounts for a time. I know that I need to do something with this money such as invest, place in an appropriate fund etc etc. I am completely clueless when it comes to finances beyond managing bills so pardon me trying to communicate this with my lack of knowledge. My question is, if I invest this money in a state college fund or something of the sort, will it be safe? Would it be wiser to just let my parents hold onto the money until after the bankruptcy?

    When my husband consults with a bankrupcty attorney, at what point are we "locked" in? Is it once he/she sees our finances or can they advise us on ways to protect the kids finances, our house etc etc before he actually files? He needs to go have a consultation, but I also want to make sure our ducks are in a row as well.
    If you put the money in the grandparent's name it will just look fishy. Do not go that route. I am not suggesting that you keep dad's name off of their money for the purposes of the bankruptcy (although its better if you do) but more because dad has already shown himself to be untrustworthy by cleaning out one of their accounts.

  10. #10
    Join Date
    May 2018
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    Default Re: Bankruptcy Due to Debt Incurred by One Spouse

    As for shifting debt, DON'T DO IT!!! It will be considered fraud, his bankruptcy will be denied and he may be prosecuted.

    As for your children's college accounts, DON'T TRANSFER THEM. It will also be considered fraud as you are trying to protect the money by putting it under someone else's name...unless you want to wait 2 years before filing for bankruptcy. They ask on the form if you've transferred ANY financial account to someone else, including a relative.

    There is no lock in period. The trustees and the creditors have the right to ask you when you first consulted your lawyer to see if there are any illegal activities after that date (like shifting accounts and giving away money).

    So, the best thing to do is wait and get your settlement and tax refunds, first. Make sure to put the settlement in an account with ONLY your name because your husband will need to submit 6 months' statements for all the financial accounts.

    All the money in all the accounts with your husband's name is fair game. However, depending on your state, kids' college funds may be exempt. I know that your house is exempt - as long as you're current, you can negotiate with the bank to continue payments on it. Good luck!!!

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