Legal Question in Bankruptcy in California
My husband and I are going through a divorce. I am getting a piece of property and a rental house (both have equity in them) that we bought together plus about $100,000 in cash; he is getting our primary residence. We are splitting the debt. He is contemplating filing bankruptcy on his business and personal debt. Will the assets I am getting through the divorce be subject to his bankruptcy proceedings?
2 Answers from Attorneys
Not if they are awarded to you via court order prior to his BK filing.
Although, it sounds like he will be filing Chapter 13 (assuming an equitable distribution of community property) since his equity in the residence sounds like it would exceed his homestead exemption ... in which case, the property and rental house would not be at risk.
No unless it can be shown that your property settlement was made to deprive your husband's creditors from being able to be paid. In other words, is your husband giving you more than half of the community property so as to avoid losing assets in bankruptcy? If it is a fair negotiated settlement with separate attorneys representing you and your husband and the agreement is approved by the court then there should be no problem. Better to wait until the divorce is final.
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