Will the divorce lawyer be paid if you file for bankruptcy?
My partner went through a messy separation and custody battle with his ex-wife. His divorce lawyer placed a lien on their home. We have since moved out of province, and the renter abandoned the house, so no mortgage payments are being made. Well after getting injured at work and the costs of the separation he is now considering bankruptcy. His only concern is that his lawyer gets paid. He does not care about keeping the house. If he files, will his lawyer be paid in full? or will the bank take what they need from foreclosure of the home and the lawyer only be left what extra money is there after all other debts are settled?
Posted from: British Columbia
If the lawyer has registered properly on title, then they would be entitled to anything remaining from the bank’s sale of the home, once the bank has been in full for anything outstanding. In a little more detail, the way foreclosures work is that the bank will typically get court permission to sell the home, once they do this, the sale proceeds will go to any parties registered on title for the home. If there is not enough to cover all of the debts in full, outstanding property taxes, the mortgage and any registrations (liens) placed prior will be paid in full before money goes down the line. If there are amounts still owing after the foreclosure has taken place, these may then be unsecured debts and could receive a portion of funds available from a bankruptcy. In summary, it’s difficult to say whether his lawyer will be paid in full as it depends on what’s owed on other debts on the home (mortgage, property taxes, other liens or writs) and what the property is valued at.