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  1. #1
    Join Date
    Dec 2008
    Posts
    2

    Default Divorce Agreements, Chapter 7, and Co-Signed Loans

    My question involves bankruptcy in the state of: Pennsylvania

    When my ex-husband and I divorced in 2007, we co-owned a business and had a loan that was in my name and co-signed by my parents (using their house as collateral). Our Marriage Settlement Agreement called for him to send me 80% of the loan payment every month until the loan was paid in full.

    I filed Chapter 7 early this year and although the business loan was considered an unsecured debt for me, we continued making the payments so the bank did not go after my parents. Now my ex-husband also filed Chapter 7 and has stopped making payments to me giving the following two reasons: (1) I was listed as a creditor in his bankruptcy and (2) the business loan doesn't even exist anymore because of my own bankrupcy filing.

    I know that a debt owed to a spouse through a divorce agreement cannot be discharged under Section 523(a)(15). However, I'm not sure about my ex-husband's argument that the loan no longer exists... it certainly does exist because if we weren't making the payments, the bank would pursue my parents for the money. Can I take him to court to force him to continue making the payments under the terms of the Marriage Separation Agreement???

  2. #2
    Join Date
    Dec 2007
    Location
    Ohio
    Posts
    2,006

    Default Re: Divorce Agreements, Chapter 7, and Co-Signed Loans

    Have your attorney get on this and ASAP. You need to protect your parents house.
    We aren't privie to see what you MSA says and have no idea what he told his lawyer to come up with his conclusion. This is something that you don't want answered on an internet forum.
    Was the business loan discharged in your bankruptcy?
    He's probably thinking that it WAS discharged in bankruptcy and your not paying on it either.
    Since you were listed as a creditor, be sure that your attorney takes your MSA to the hearing.

  3. #3
    Join Date
    Dec 2008
    Posts
    2

    Default Re: Divorce Agreements, Chapter 7, and Co-Signed Loans

    I already have my attorney looking into all my options... I just thought I'd post here to get some additional feedback.

    To answer your question, the bank was listed as one of my unsecured creditors (you have to list all unsecured creditors in Schedule F). Of course the loan is actually secured... just by my parent's property. So technically the business loan was discharged although I have chosen to continue to make the payments. Payment of the loan by my ex-husband was specifically discussed in the MSA, so I don't think he has the right to decide to stop paying now.

  4. #4
    Join Date
    Apr 2007
    Location
    Il.(near StL,Mo.)
    Posts
    5,252

    Default Re: Divorce Agreements, Chapter 7, and Co-Signed Loans

    That's about all you can do is work with your attorney & be sure the Marriage Settlement Agreement is taken to the hearing.

  5. #5
    Join Date
    Dec 2007
    Location
    Ohio
    Posts
    2,006

    Default Re: Divorce Agreements, Chapter 7, and Co-Signed Loans

    I agree with Betty3 on this one. You need a great lawyer here. The problem is that the loan was discharged in your bankruptcy...your choosing to repay it, just as he is choosing not to. Good luck and let us know how it works out.

  6. #6
    Join Date
    Dec 2008
    Posts
    5

    Default Re: Divorce Agreements, Chapter 7, and Co-Signed Loans

    I think your parents might need a lawyer. Just in case things take a turn for the worst.
    Speak to your lawyer first.

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