I do appreciate the answers to my previous asked question; however, I would like to rephrase my question. During my first marriage, I co-signed for a car for my ex-wife. When we got divorced, the car was awarded to her and all financial obligations/debt were released from me, per my divorce decree. She filed for bankruptcy and had to turn the car in as apart of the bankruptcy. With my divorce decree being a legal binding document, doesn't that protect me from having to owe this debt if it states that I will be released from all financial obligations/debt incurred during the marriage? Also, what are the legal ramifications of such debt? Are they able to file a 1099-c and take my income tax or put a lien on my home that I own with my current spouse? What about wage garnishment? Is there a way out?
Answer
If she filed a Ch 7 bankruptcy, and if your judgments provides she is responsible for the car loan and is to hold you harmless, her failure to pay the loan is a non-dischargeable obligation. However, as between you and lender, you are still liable. If they come after you, then you can seek a court order directing that she pay the loan. Whether that is a realistic approach is a different matter.
As to a 1099 , if they forgive your obligation, they may be able to issue a 1099. you need to discuss that with an accountant or tax preparer.
Only if they sue you for non-payment and obtain a judgment can they then put a lien on your house. You should probably own your house as tenants by the entirety. If that is the case, then they can not enforce the lien against that asset (so long as you remain married and living in the house.
Answer
Your divorce decree is legally binding between you and your former spouse only. The lender was not part of that court case, and therefore is not bound by the judgment.
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