Expert: Terry Leeders - 2/1/2008

Question
My daughter applied for SSDI over 2 1/2 years ago.  Her husband left her 2 years ago.  Their divorce comes up in March.  She just received a lump sum payment from Social Security for her disability.  She has not paid any of her credit cards, etc. for the past two years however I have been paying her car payment; titled jointly. I have been paying all her expenses the past two years with the agreement she pay me back when she got her settlement.  She is planning on filing Chapter 7.  Does she have to disclose the lump sum payment of social security disability? She owes me $8k of the $15k she received.  What effect will that have on her filing?  Also what happens to the car since it is in her husband's name also?  She would like to keep it.  Thank you.

Answer
Yes, she would disclose it.  Her attorney will use state exemptions to protect it. She should not pay you, as the trustee in the case can then come after you for the funds.
For a cosigned debt, she can choose to reaffirm the debt so she can keep the car, and should continue to make the regular payments on it.
She should talk to a local bankruptcy attorney to get state specific advice.