Legal Question in Bankruptcy in Indiana

Re: Can I File

You cannot choose what to list and discharge and what not to list. All debts and assets must be included even those you intend to continue to pay. Most forms offer a free initial consultation so I recommend that you talk to someone asap to learn your options. Your daughter-in-law did not sign the Note so she is not liable

Re: Can I File

Merely the possibility that you as a co-signer or guarantor would become liable for a debt should not be the influencing factor on a bankruptcy. You have a right to file bankruptcy if you are insolvent (either in the sense that your obligations are larger than your assets or that your expenses exceed your income).

However, the law also requires that the persons primarily responsible for a debt are sought first before the creditor looks to the guarantor for payment. You can insist the creditor prove that he has exhausted his remedies against the principal debtors. Whether both the child and the in-law spouse are liable depends upon whether they both signed for the obligation. If so, then the creditor must chase both of them before he can look to you for money.

If the assets is sold, then the proceeds should go first to the creditor. The divorce court will generally enter an order determining what liability the spouses have on account of any deficiency after sale.

You could file a motion to intervene in the divorce to make sure the court knows that you are a guarantor and perhaps be awarded the property for the purpose of having it sold and the proceeds applied.