Chapter 13 vs. Divorce Debt

[gfgettngscrwd]

[rrockinggramma]

I will try to address some of your issues but I don't think you will like the outcome. It is an unfortunate circumstance that your gf is in to be sure but it happens all the time in divorce situations. There is a part of the bk law concering divorce proceedings and exactly what can be discharged but I believe (and I am not sure here) that it mostly pertains to chapter 7's and discharging all debt etc. Her ex is filing a chapter 13 and that changes the equation cause he isn't walking away, he is going to be paying back 60 percent and that is quite a substantial amount in my opinion. And he has listed the ex as a creditor, again just as he should have.

As to the expenses he lists. It is not uncommon for attorney's to take full advantage of all available expenses for their clients. He might not actually have those expenses but he has to live too, inaddtion to paying the trustee now for the next 5 years. Believe me that isn't easy. I don't have all of the expenses listed on my sheet, but they are allowed and my attorney included them so I would have some extra to survive on. You have to plan for the future. Now, my question to you is you want to challenge his expense sheet so you can watch him suffer and crumble for the next five years and have next to nothing to live on during his plan? And I am not sure unless you can prove fraud is involved that you have the right to challenge his expense sheet. The trustee can challenge any expenses that he feels are out of line or too high, but if they are allowed expenses per the new BK law, he has every right to claim them. (I don't have drycleaning now as I am retired, but my lawyer included a 10.00 monthly expense for it. Am I not entitled to this because I have only 1 time had an item drycleaned in the past twelve months for 60.00 total cost-my bedspread? even though I am allowed 120.00 a year for it)

So, I don't believe that the ex has really done anything illegal here or committed fraud so I think your ex is indeed going to be the one here left holding the bag with the creditors.

As to the co debtor stay, it is an automatic in a chapter 13. Once filed your gf will be protected (or should be) until the ex is either discharged or dismissed. And if you have his case number etc you would only have to give that to the creditors etc.

Now, because he didn't remove her name from the debts etc as was stated in the divorce proceeding, I am not sure how that plays out. But again he isn't walking away, he is paying 60 percent back to the creditors, if not more since not all creditors will file claims.

Creditors can file claims in a chapter 13. As your gf is listed, she is entitled to file a claim to be paid by the ex during the BK. If you feel and she feels that the ex owes her, then file a claim for that amount. It may be challenged by the trustee and then the gf will have the opportunity to prove the claim. If it is allowed by the trustee, then she will receive 60 percent of that claim, along with all of his other unsecured creditors. Your gf can then apply that to the past due balances that were joint with her ex.

Good luck.

[lrprn]

In the bankruptcy filing my girlfriend is listed as a creditor, however with a $0.00 debt owed. I imagine this is to protect him (the ex),from my girlfriend for taken him back to civil court and finding him in contempt. The divorce decree also stated that he was to remove her as an applicant on the debt that was assigned to him, which of course he never did.

I agree with rrockingramma's advice. Also I assume from what you said that your gf is a co-signer on these cards, not just an authorized user?

Can I ask just what exactly how little can a lawyer do before being guilty of malpractice?

This is nowhere near legal misrepresentation. If your gf really wanted to attend the 341 meeting, she still could have. However, the 341 meetings I witnessed that did have a creditor there with their lawyer, the creditor's lawyer did all the talking.

It is our intent to challenge each and every one of these expenses, which we know he cannot justify by means of receipts, to higher his payback amount and ease the burden which will eventually be but on my girlfriend, which I believe is a complete injustice this can even happen as she has been faithfully paying all her post divorce debt.

To report suspected bankruptcy fraud that your gf can prove with documentation, she can contact the Department of Justice Bankruptcy Fraud Hotline at [email protected] or send a letter to
Executive Office for U.S. Trustees
Criminal Enforcement Unit
20 Massachusetts Avenue, NW
Suite 8000
Washington, DC 20530

(Information from http://www.usdoj.gov/ust/eo/fraud/index.htm)

I must add here that I have always felt that hey, you borrowed the money you should be obligated to pay it back and bankruptcy is the cheaters way out.

Well then, it takes a lot of nerve to ask us "cheaters" for advice to save your gf's financial a**.

Statistics collected for DECADES consistently show that 98% of people that file bankruptcy in the US file file for completely legitimate reasons - there's no fraud involved whatsoever. You've fallen for the hype put out by lenders who don't want to be held accountable for making bad financial decisions themselves. Most of us file bankruptcy because of job loss, overwhelming medical illness or injury, or....surprise!....divorce.

Believe me when I say that almost all bankruptcy filers do everything humanly possible to avoid filing - we sell our wedding rings, empty out our retirement accounts, you name it. Before you start throwing stones at us, make sure you understand just what you're throwing at.

Be very thankful that at least some of this forum's members are still willing to help you and your gf sort things out even after taking the hit from your completely false "all bk filers are cheaters" stone. Our request - hang around and find out just how WRONG you are about all bk filers being cheaters....we aren't. I hope if you ever find yourself in our shoes, you will get a much less judgmental reception. You have a lot to learn, my friend.

[spell]

Here's the ultra short version:
1. If he owes you money, present your claim to the trustee and get in line for 60% payback. As a creditor, you can object to his expenses, but don't hold your breath.
2. If he violated the divorce decree, feel free to drag him back into divorce court.
Oddly, these two courts opperate very separately.

Spend some time and effort teasing apart what debts are cosigned. And compare back to how things were divided in the divorce.

[gfgettngscrwd]

He might not actually have those expenses but he has to live too, in addition to paying the trustee now for the next 5 years. Believe me that am not easy. I don't have all of the expenses listed on my sheet, but they are allowed and my attorney included them so I would have some extra to survive on. You have to plan for the future. Now, my question to you is you want to challenge his expense sheet so you can watch him suffer and crumble for the next five years and have next to nothing to live on during his plan? And I am not sure unless you can prove fraud is involved that you have the right to challenge his expense sheet. The trustee can challenge any expenses that he feels are out of line or too high, but if they are allowed expenses per the new BK law, he has every right to claim them.

You fail to understand that under his payment plan she will actually end up paying more per month then he. And this is before even considering the half of the divorce debt that was assigned to her that she has been paying all along. As all the cards are still accruing interest, the consensus from the CC companies is whatever he doesn’t pay, she will half to. I don't see how forcing her into bankruptcy is in anyone’s best interests. Not to mention that on these cards that he is now filing, he has managed to rack up an additional 15k post divorce debt that will eventually fall on her. Please tell me how this is fair? As for your "Well everyone has to live" That is laughable in this circumstance as his "payment plan" to the trustee amounts a mere $400.00 a month. One of the expenses the ex is claiming in which we would like to challenge and ask for documentation/reciepts on, is that of child care in which he doesn't pay a dime. As for the fraud issue he claimed a dependent on his taxes he didn’t have, not to mention that some of this credit card debt he amassed was from of an out of court settlement to his old employer for his embezzlement of company funds.

The one thing I find most odd is that the divorce decree stated that he was to remove her name from all the credit cards he was assigned to pay and never did. Now, as a result, these cc companies are coming after her. As she is listed as a creditor in his filings, does this limited her abilities to go after him for not having her name removed as the divorce settlement stated he must? Afterall, if he would have abided by the divorce settlement, she would not be a creditor at all, correct? Oddly enough, his failure to do so despite the court order which technically places him in contempt, is going to benefit him as he can now list her as a creditor which will limit her ability to pursue him after the 5 year period.



As for my all bankruptcy filers are cheaters statement I don't think I ever said that. If so I retract that statement, however in the gf ex's case, he is taking full advantage of a flawed system, all of which will be at her expense. For example:

1) He amassed another 15k+ in debt on cards that were pre-divorce joint cards in which the civil court ordered him to have her name removed, which he did not. This debt will eventually befall upon her.

2) He stopped paying all credit cards approximately 6 months ago at the advice of his attorney, and managed to amass $6k in savings.

3) On his expense sheet he is claiming

a) $45.00 for phone in which he pays $0.00 (he is a sales manager for sprint and gets his phone for free)

b) $600.00 per month for gas which is extreme and no way does he drive that much or does his job call for any travel. He has approximately an 18 mile commute back and forth to work each day, in a brand new leased vehicle I may add which of course he plans to keep.

c) $80.00 Per month in clothing

d) $10.00 per month in charitable contributions in which he makes none.

e) $50.00 per month in child care and another $65.00 per month in school expenses. Be aware that as per the divorce settlement, neither party pays child support. Getting money out of him for anything related to the one adolescent child is like pulling teeth. For example, he refuses to pay for 1/2 the medication the child is now on, refused to contribute for the clothes she bought the child for back to school...etc etc. Getting the picture?

When all is said and done he is claiming per his worksheet an average of $2,902.00 which is grossly overstated. Add to the fact on his income, he does not appear to be reporting all his income, but this part is tricky as he is a sales manager and a good portion of his income is his sales commission bonus's.

[gfgettngscrwd]

I would like to once again re-iterate a few things. It seems there is very little case law as it is applied to the ex-spouse that is suddenly thrown into this bankruptcy mess due to the filing by an ex. We have searched extensively and that is what brought us here. Somehow he managed to get the best bankruptcy lawyer in town, leaving for us the also rans. We talked to several lawyers before settling on one, but all of them did not know much as it pertained to how to go about representing her. They were all quite knowledgably in how to represent one who is filing bankruptcy however. The lawyer we did get seems to be too busy to answer her calls or emails as she has many questions as to what she should do.

As we now understand it, while the ex may be forgiven the debt (or portion thereof it) after five years, whatever balance is owed the CC companies can come after her for any amounts remaining. To further complicate things, while the bankruptcy may force the creditors to stop charging interests and penalties to him that does not stop them from passing these charges on to the co-debtor that is not filing bankruptcy. So, as the payment plan seems to represent a 60% payback, it doesn't quite work that way from our perspective as the balance owed at the end of the 5 years will actually be higher than the balance now. One card alone, Chase Visa, is now charging (after his July 31 filing) $300.00 per month in interest alone.

There have been a few posts suggesting that after five years all will be over. It is our understanding that this is not quite the case.
While it may be over for him, there is nothing to keep these companies from continuing to go after my gf. And while some companies may even drop out and not file a claim against the ex, this in no way prevents them from merely turning their attention to my gf for collection.

And while some of you are sympathetic to his situation and balk at the thought of us challenging his reported expenses, I do not believe that this process should leave him in a better position than her. Understand that this will leave her all but destitute should things be allowed to stand as is, with him merely paying $400.00 per month to the trustee and leaving her with an additional $1000.00 to $1500.00 per month additional debt along with her portion of the post divorce debt in which she pays on time every month. Oh, and did I mention that one of the provisions of the divorce was that she was to give him half of her stock that she obtained from her employer as a yearly bonus, to which he merely cashed out and blew rather than applying it towards his debt?

A few comments have been made that I have my nerve coming on this board and asking questions when I voiced my opinion so negatively towards people who file bankruptcy. Let me clarify my position. There are basically two types of people who are forced to file bankruptcy. First there are those, which through no fault of their own, due to a loss of a job, health issues, accident etc that are forced into this position. Those people have my full support and I have the utmost empathy for them. This is what bankruptcy is for.

Then there are those that have lived well beyond their means, failing to abide by any fiscal responsibility, and continued to rack up debt upon debt, subconsciously knowing that there was no way they would ever be able to pay it back. To these people I have no empathy for and the ex most certainly and callously falls into this category.

[gfgettngscrwd]

Here's the ultra short version:
1. If he owes you money, present your claim to the trustee and get in line for 60% payback. As a creditor, you can object to his expenses, but don't hold your breath..

While she is listed as a creditor, she is listed as having a balanced owed of $0.00. And while what is not paid on the debt he was responsible for as per divorce will ultimately befall on her and she might be able to file for that, her getting money as if she were a creditor to help pay for these debts ultimately lowers the amount he will pay on these debts himself so it leaves her in no better position.

2. If he violated the divorce decree, feel free to drag him back into divorce court.
Oddly, these two courts operate very separately.

Spend some time and effort teasing apart what debts are cosigned. And compare back to how things were divided in the divorce

[rrockinggramma]

well he can always amend his plan to include them but it would have to be done before the bar date for his creditors to file claims. I am not sure what happens in a chapter 13 if a creditor is left off the list.

But the cc companies will come after who they think will pay up. Her only recouse might be to file herself so she can put this behind her and move on with her life.

[lrprn]

They should not be allowed to operate so separately. The system is broke. It needs to be fixed. It needs to be fixed badly. ... It doesn't take a rocket scientist to figure out how flawed and stupid this is. When they changed the bankruptcy laws didn’t anyone have the foresight to see this type of thing happening?

Welcome to our reality. You can thank the 2005 Congress for this mess.

Or did they and just thought it was a way for lawyers and the courts to increase revenues?

No, actually the entire bankruptcy system fought for years to block the new law from being passed. You can thank the CREDITORS, primarily the credit card companies, for this disaster. They actually WROTE the law, mounted a big PR campaign to convince America that the majority of bankruptcy filers were filing fraudently (completely false!), and finished up by giving millions and millions of dollars to congressional campaigns to be sure it passed. It was a great example of our American political system at its most corrupt.

The answer to your gf's dilemma is obvious. She needs to file bankruptcy too. That wipes out what she will "inherit" through his bankruptcy plus her own debts from the divorce. Her ex is using the crappy current bk law in his favor....she can too.

Trust me....if railing against the current unfair bk law could change it, all of us would have had it changed a long time ago. Write your congressman to share the reality of what's happening to your gf. Ultimately sharing what's happening to innocent people because of this bad law is the only way it will ever get changed.

[rrockinggramma]

As to the child expense, does the dependent spend time with him on the weekends or during the summer? That is a reasonable expense if that is the case cause he has to feed the dependent etc while they are in their care. 80.00 for clothes seems reasonable when he is a salesman and probably has to wear and buy suits for work. My point is on his expenses, I just don't think (oher than the gas expense which might also include car insurance, registration, licensing fees etc all rolled into it) they look unreasonable, but I could be wrong. 10.00 in charitable contributions doesn't have to be to a church. It could be to the girl scout cookie kids or the school buy my candy sale etc. There is lots of ways to justify that expense.

I feel for you that you and your gf are in this situation but I guess I don't think there is a lot (as creditors in this case) you can do to make it not happen.

[gfgettngscrwd]

If the expenses are challanged doesn't he has to provide proof by means of receipts? The gas expense appears to be gas alone as there is a seperate line item for auto insurance. This alone is double what it should be, and another 300 dollars to put towards his payment could make a huge difference.

No, we/she does not want to file bankruptcy, nor should we be allowed to be forced into it. We were just about to purchase a house when this mess exploded upon us. I knew this would be the general consensus...for her to file herself. Personally I think its a load of BS for something like this to happen and I know full well he is taking advantage of the system. I want to know what she can do to minimize the damages without filing bankruptcy. I heard someone mention that a co-debtor stay is automatic. From what I understand, It is something that has to be requested and most of the time is not granted by the judge from what I have read. Does anyone know of this for sure?

[gfgettngscrwd]

The answer to your gf's dilemma is obvious. She needs to file bankruptcy too. That wipes out what she will "inherit" through his bankruptcy plus her own debts from the divorce. Her ex is using the crappy current bk law in his favor....she can too.

I don't see how destroying her credit for five years can by any means be a solution. Not to mention that a good portion of the divorce agreement assigned her the student loan debt which is not dischargable in bankruptcy

[gfgettngscrwd]

On a side note can you ask to be removed as a creditor from the bankruptcy papers? after all how can you be a creditor with a $0.00 balance?

[CindyLou]

With bankruptcy, you do not have to show receipts to "prove" anything unless you are audited by the trustee. It is more or less an honor type system. You do however have to provide checkstubs, tax returns, and in some cases recent bank statements. VERY RARELY do trustees ask to see receipts for expenses unless something is unreasonable. With the new law especially most things go with what is allowable by district anyway, so more than likely it is all basically kinda "cookie cutter" expense type allowances, so I wouldn't get too hung up on the nickle and dime aspects of the expenses. As far as asking to be taken off the matrix. I don't think you can do that. Like the others. I agree. And, whether you like it or not, I think you eventually will agree too that your gf's only choice will be to file BK. The creditors will really force her into it once her ex files. They will really give her no choice. Once he files they will begin the judgement game with her. I know you are angry and she is probably very hurt. But BK is not the end of the world. I am almost 2 years out and I am doing very well financially. You would never know I filed if I didn't tell you. Life as usual. Cars, house, job, vacations, etc.....life as usual...just no debt and smart financial decisions. I know you don't know my story like the rest of the folks here on the board and I know you would love to know which of your categories I fall into (cheaters or non-cheaters)...I'll let you wonder.......But I will tell you this. Bad things happen to good people. And maybe this is the case with your gf. And maybe she will have to explore this BK think so she can move on with her life. Hopefully we can help you out with this stuff. We've been through it all, man really, we have. So if you want help, we are here. And if you'd like to know if I'm a cheater or non-cheater, let me know....

[gfgettngscrwd]

As it stands we will loose 15k that we have in an escrow account towards a real estate deal if she is forced to file bankruptcy, as I am certain that we will not be able to obtain financing within the two years necesarry should she have to file.