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Bankruptcy, Foreclosure and Divorce

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If one of the parties to a divorce action files for divorce, can he or she later file bankruptcy during the course of the divorce? The answer to this question is yes. Now let’s change the circumstances a bit. A husband and wife are involved in a divorce and during the course of the divorce, the husband is ordered by the court to make mortgage payments. Unfortunately, he falls behind in the mortgage payments. Is filing for bankruptcy the best route to stop the house from being foreclosed upon? The answer to this question in many instances is yes.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, the debtor sets up a plan to reorganize his or her debts. The plan is designed to bring the debtor up to date on his or her debts during a period of three to five years. The amount of the payment pursuant to the bankruptcy plan is based on the debtor’s income.

Debts are classified into various types within the plan. Unsecured creditors, such as debts related to credit cards, may be paid on a percentage of what is owed. Interest and penalty payments to these creditors are eliminated in the plan.

Mortgage Payments

Secured creditors, such as mortgage holders on real estate, are paid 100% of what they are owed under the plan. Banks holding mortgages who have refused to accept payments from the debtors are now forced to accept mortgage payments from the debtors under the bankruptcy plan.

Bankruptcy Protection for the Spouse

Under the bankruptcy law, child support and spousal maintenance payments are non dischargeable debt. This means a father obligated in the divorce to pay spousal maintenance and child support to his wife cannot eliminate these debts. Financial obligations of the payer’s spouse, under court orders of the divorce to make mortgage or home equity line payments, are considered to be part of the spousal maintenance and child support payments and these obligations are also non dischargeable in bankruptcy.

Chapter 13 bankruptcies can successfully be utilized to give a spouse who has obligations to make mortgage payments and pay spousal maintenance and/or child support an opportunity to come current in these obligations, save the home from being sold in foreclosure and comply with the state court order.

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Foreclosure Defense

The foreclosure defense lawyers at the Law Offices of Schlissel DeCorpo have been representing individuals with financial difficulties for more than three decades. Our office helps our clients prepare mortgage modification applications. We also deal with mortgage modification programs that fail to meet our clients’ needs. We defend foreclosure lawsuits for our clients. We attend foreclosure court conferences, litigate defective foreclosure lawsuits, predatory lending issues, defective mortgages and bad faith on behalf of financial institutions. We also assist our clients with other types of real estate litigation. Should bankruptcy be the route to dealing with our clients’ problems, we file both Chapter 7 and Chapter 13 bankruptcies on behalf of our clients. Feel free to call us for a free consultation at 1-800-344-6431, 516-561-6645 or 718-350-2802.

The Court Values Marital Property and Professional License

Justice W. Kelly, sitting in the Supreme Court in Rockland County recently rendered a decision in a contested matrimonial action. In this lawsuit he determined the valuation of the husband’s dental practice. He also valued other separate property and marital property. The assets in question were the marital residence and its contents, and husband’s commercial real estate as well as his dental practice in Rockland County. There was also an issue concerning the appreciation of a dental practice the husband maintained in the City of New York. The couple also had bank accounts, bonds, investments and various retirement accounts. On the other side of the ledger were credit card debts.

During the course of the trial the husband claimed that he was entitled to a credit of approximately $324,000. This represented a gift from his father that he used to purchase the parties’ home. The parties’ home in Rockland County was appraised at the time of the divorce at approximately $915,000.

The wife claimed that the gift from the husband’s father had been trans-mutated into marital property because it had been commingled. Justice Kelly determined that plaintiff was entitled to a credit for the separate property used to purchase the home, to wit: the $324,000 given to him by his father, even though there was a commingling of the separate property with marital assets. He stated that the balance of the proceeds from the sale of the marital residence should be distributed equally. He awarded the wife a 35% interest in the equity in her husband’s real estate. This took into consideration her participation in his dental practice.

High Asset Divorces

Our law firm has been representing doctors, lawyers and individuals who own small businesses in divorces for three decades. High asset divorces require the skill, patience and knowledge of very experienced matrimonial attorneys. Our office maintains an accountant on our staff to assist us in the valuation of sophisticated assets. If you have issues involving equitable distribution of assets, division of property, valuation of professional practices and licenses in divorce proceedings, the eighty (80) years of combined expertise in our law firm has in handling divorces would be invaluable to you. Call us for a free consultation at 1-800-344-6431; 516-561-6645 or 718-350-2802.

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