Expert: Terry Leeders - 10/10/2007

Question
QUESTION: Dear Mr. Leeders, you may have answered this question in the past, but I did not see one exactly like it.  I am about to be sued personally (not yet served) due to my involvement in an at-fault auto accident in Illinois in 2006.  I have received a notice of attorney's lien.  The complaint, when served, will undoubtedly be sent to my auto insurance company in order for them to defend me.  Given any potential court judgment (policy in effect at time was for minimum coverage for state of Illinois), I would have to file for bankruptcy.    I am married.  However, I am unemployed (SAHM for several years, have three children under 10), have no income, have no assets, all vehicles are in husband's name, and home is in tenancy in the entirety.  My question would be should I consider filing bankruptcy now (although, at this point I have no debts, accept for two credit cards in my name with balances below $1,000) in anticipation of any judgment, or wait until after any judgment and file immediately thereafter.  Also, what would my husband's liability be due to my filing bankruptcy?  Thank you for taking time to answer my question and for providing any practical advice.  Marie

ANSWER: Hi Marie,

Unfortunately, any debt that arose from injury due to DUI accident would not be discharged in a bankruptcy Chapter 7.  A Chapter 13 can repay the debt over 5 years, and the court would look to income from you and your husband to fund the repayment.  You may want to hire a DUI defense attorney to help you, who can work out a repay agreement in the event you do lose the case.

---------- FOLLOW-UP ----------

QUESTION: Dear Mr. Leeders, Thank you for your extremely prompt response.  I have some other follow up questions:  What would happen in the case of a divorce, before, during or after any judgment.  (This is a real possibility as our marriage has been COMPLETELY STRAINED since the accident.)  Although my husband is not involved in the suit in any way, how is it that they can go after assets in his name only?  Is it that they are considered joint assets under Illinois law because we are married?  Could he then file for bankruptcy?  What would happen if we both file for bankruptcy.  Should a judgment be handed down and a bankruptcy not filed, is there a statutory time limit for the collection of same?  Can my husband's pay check then be garnished to collect on a judgment against me only?
A little wordy, but thanks.  One more, does a judgment become dormant and not collectable after a certain time?

Answer
if the assets were only in his name and from before the marriage, then they cannot attach just his assets.  This is assuming there was no quick - recent transfers.  Illinois is not a community property state as you described.  if they were acquired after the marriage, and you contributed to the down payment, monthly payments etc..they can try to go under a contribution theory.  I only practice bankruptcy, so as to how they can try, I am not sure.  It is possible for a debt to become dormant, but can be revived and continued though.  Hope that helps.