brother and his bankruptcy

[123boxie]

I tried posting this once and I didn't see it come up so I don't think it went.

My brother is currently deployed, but coming home due to injury.

His house is currently in foreclosure awaiting his return. His exwife lives in the house with the kids. My brother typically makes around 90k and now he is making half of that. He has creditors lining up at the door and and he already has judgments against him.

I suggested chapter 7 before he goes back to work and his income goes back up. He will be coming home soon. He wants to save the house for his exwife. Can he let the house go in bankruptcy just so it will be in her name only? Then she can work with the bank or would the bank just sell it? She is a deadbeat. We live in IN

Thank you,

Jen

[keepinitreal]

Sorry about your brother's injury and financial difficulties. He definitely should get a free consultation with a bankruptcy attorney to determine what his options are. I assume he's divorced, since you wrote "exwife". If he is, and his name is still on the house, a bankruptcy could remove his personal liability for that debt. Hope things work out for him!

[123boxie]

yes I want him to get a consultation. However, he is still under medical care and hasn't been released to come home yet. he is in another state currently. I just was trying to give him some information so he can get the process started before he comes home from active duty and goes back to his money making job. I figured he would probably be approved for chapter 7 now.

The house: Can he let it go in bankruptcy? Would his ex wife (yes he is divorced) be able to assume the house since she is not filing bankruptcy?

Thank you.

[keepinitreal]

If he's considered a one-person household, he would need to make under $39,803 annually, calculated from his past 6 months' income, to easily qualify for Chapter 7 bankruptcy.

The median income for a 2-person household is $50,279, for 3 it's $58,075 and for 4 it's $68,109.

Yes, you can let a house go in bankruptcy. You just have to not sign any re-affirmation papers for that debt in all the bankruptcy paperwork. Then you are no longer personally responsible for any deficiency if it's foreclosed on in the future.

Not sure what would happen if in the divorce agreement he had agreed to be responsible for the mortgage and make the payments. In some instances, divorce agreements over-rule the usual bankruptcy rules. That's where an Indiana bankruptcy attorney is needed.

[tcreegan]

Hi 123boxie,

If both names are on the mortgage, he goes BK and she is stuck with the mortgage.

BUT....he has to be careful of the terms in the divorce decree. Obligations in a court-ordered divorce decree, along with child-support, are not discharged in a BK.

When your brother gets better and gets home, have him interview a number of attorneys. Have him ask about communications, email/phone/fax, turnaround time on replies, do you speak to the attorney or secretary or paralegal, Then ask about work ethic/organization style; detail oriented, dot i's cross t's or 'this is good enough,' file documents ASA or 'so it gets there before the deadline, And lastly, competetence, experience w/ local court & trustee, also know divorce law,

In the meantime, if you are going to help him through with this, go get the NOLO book (www.nolo.com) It is a step-by-step guide for filing BK.

AND, please tell him I send my gratitude for his service and pray for his reovery

Tom in Colo

Opps...also discuss exactly what the attorney does for the $$ retainer paid.

[123boxie]

Tom,

Thank you very much. I will certainly get in contact with an attorney and help him with his first free consult. I really hope my brother can go through with this and simplify his life.

Thank you for the kind thoughts. He is not seriously injured, thank the lord, and we are excited he will get to come home.

I will check out Nolo.

thank you again.

Jen

[HHM]

If he was deployed, and most of the debt was incurred during this time, he may be exempt from the means test. Sorry, don't have time to look up the exact criteria for deployed vets and the means test. But there are some exceptions.

[tcreegan]

Good thought HMH!

The requirements are to have had 90 days active duty and not be over 540 days from last active duty.

123boxie, when you get to the part about means testing (form B22A) your brother fills out Part I then skips everything and signs on Part VIII.

He doesn't need to calculate income/expenses, he automatically qualifies for a Ch 7 Now, in case he feels left out, there are plenty of other forms to fill out to stay qualified....oh well, he probably knows about how many forms are needed for the US govt....

Happy Thanksgiving!

Tom in Colo

[keepmine]

If that judgment was returned while he was on active duty, he may have grounds o have it overturned under the Servicemembers Civil Relief Act. If he's still on active duty, he may want to speak with a JAG officer.

Court Proceedings. If a servicemember is a defendant in a civil court proceeding, the court may (note the word "may"), on it's own motion, grant a 90-day stay (delay) in the proceedings. If the servicemember asks for a stay, the court must grant a minimum 90 day stay, if:

The servicemember submits a letter or other communication setting forth facts stating the manner in which current military duty requirements materially affect the servicemember's ability to appear and stating a date when the servicemember will be available to appear; and

The servicemember submits a letter or other communication from the servicemember's commanding officer stating that the servicemember's current military duty prevents appearance and that military leave is not authorized for the servicemember at the time of the letter.
The provision applies to civil lawsuits, suits for paternity, child custody suits, and bankruptcy debtor/creditor meetings, and administrative proceedings.
The new act specifically states that a servicemember communicating with the court requesting a stay does not constitute an appearance for jurisdictional purposes and does not constitute a waiver of any substantive or procedural defense (including a defense relating to lack of personal jurisdiction). Under the old act, some courts held that merely communicating with the court (i.e., requesting a stay, implied that the member agreed to jurisdiction of the court).

A servicemember who is granted a stay may request an additional stay, if he/she can show that military requirements affect his/her ability to appear (commander's letter is also needed). However, the court is not obligated to grant the additional stay.

If the court refuses to grant an additional stay of proceedings, the court must appoint counsel to represent the servicemember in the action or proceeding.

If a default judgment is entered in a civil action against a servicemember during the servicemember's period of military service (or within 60 days after termination of or release from such military service), the court entering the judgment must, upon application by or on behalf of the servicemember, reopen the judgment for the purpose of allowing the servicemember to defend the action if it appears that--

the servicemember was materially affected by reason of that military service in making a defense to the action; and

the servicemember has a meritorious or legal defense to the action or some part of it.

http://usmilitary.about.com/cs/sscra/a/scra2_3.htm