When Divorce and Personal Bankruptcy in Indiana Mix, There’s No Free Motocycle Ride!

May 30, 2012 5:08 pm Published by

A recent “Dear John” letter published in foxbusiness.com’s  Personal Finance section posed one question that comes up all the time at the Zuckerbergbankruptcy law offices:
 
           What about our motorcycle?
 

Well…almost all the time. As a debt consolidation lawyer offering Indiana bankruptcy help, I find questions do come up very frequently when, after a divorce, one spouse files individual bankruptcy in Indiana. As every good bankruptcy attorney in Indiana knows, divorce and bankruptcy are two totally separate legal proceedings, yet often they can affect each other.

In the story I read in Fox Business, a husband and wife had shared a loan for a motorcycle. After their divorce, the ex-wife filed bankruptcy. The man had been making the motorcycle loan payments and the property settlement stated that the man would get full title to the motorcycle once the loan was fully paid. Problem: the lender “froze” the account, not allowing the ex-husband online access. In his “Dear John” letter, the man was asking if he should continue to make the loan payments.

Over my more than 25 years practicing Indiana bankruptcy law, I’ve learned that divorce can, on the one hand, make both ex-partners’ personal debt situations clearer after both the marital property and the debts have been divided. On the other hand, as one of my Columbus bankruptcy lawyers remarked,  the lender doesn’t care that only the wife had filed bankruptcy and not the husband (the creditor just wants to get paid), but that lender must also obey the bankruptcy automatic stay and stop all collection proceedings. And as foxbusiness.com noted, the lender’s computer system is not set up to deal with such a relatively complicated set of circumstances. The ex-husband, meanwhile, is worried that if he chose to surrender the motorcycle, thatwcould look bad on his credit report!

Some general take-aways from the Fox Business story for readers of these Bankruptcy in Indiana articles:

  •  Unlike this motorcycle case, property ownership and debt situations are generally simpler to deal with after property has been divided in a divorce.
     
  •  A motorcycle loan, just like a car loan, is a secured debt. That means, if you miss even one payment, the vehicle can be repossessed without any advance notice. Since I’m an Indianapolis lawyer for bankruptcy, I’m involved in many, many discussions about keeping cars and about getting them back after they’ve been repossessed.
     
  •  After so many years offering Indiana bankruptcy information, I’ve learned what many, many non-attorneys do not know: A divorce may break you up legally, but financially you may still be tied to each other.

 
The moral of this story: It’s crucial to obtain expert legal advice when it comes to filing personal bankruptcy in Indiana! 

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This post was written by Mark Zuckerberg

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