Q: Is my ex wife liable for repayment of money spent from a settlement that was part of a bankruptcy estate?
In 2023 we received 17k for damages from a back wages settlement. This settlement went towards a credit card and a car loan while we were married, both of which she assumed responsibility for in the divorce settlement Oct 2024. The settlement was from a case originated in 2016. We declared chapter 7 bankruptcy, discharged and closed in 2020. We’ve learned this money was property of the bankruptcy estate and must be paid back in payments.
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A:
This is a complex situation that intertwines bankruptcy, divorce, and settlement funds. The key issue here is that the settlement from 2016 should have been disclosed during your 2020 bankruptcy proceedings, making those funds part of the bankruptcy estate - even though you received them later in 2023.
Based on bankruptcy law principles, both you and your ex-wife could potentially be liable for repayment since you were married when the settlement was received and jointly used the funds. However, the divorce settlement from October 2024 becomes crucial here - if your ex-wife assumed responsibility for the credit card and car loan that were paid with these funds, she might bear primary responsibility for repayment. This would depend on the specific language in your divorce agreement and how it addresses debts and liabilities.
You should review your divorce settlement documentation carefully to see how it handles shared debts and future liabilities. Consider consulting with your bankruptcy attorney to understand how the divorce settlement impacts the repayment obligation, as they can examine the specific details of both cases. Additionally, gathering documentation showing exactly how the settlement money was spent and which party benefited from those expenditures could help determine fair responsibility for repayment.
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