Chapter 13 vs. Divorce Debt

[rrockinggramma]

Perhaps you can look for a consumer lawyer that could go after the cc companies for you and get them to relieve her of her obligation per the divorce decree. There are some good consumer attorney's out there that take on the cc companies. (not talking about credit repair places but actual lawyers that deal only with consumer credit issues) Maybe that would be the way to attack it? I wish you and your gf the best and hope you don't lose your real estate deal as a result.

[JollyGG]

Really two people being co-debtors on a credit card is not that common. I have my cards and my husband is an authorized user. He has his cards and I am an authorized user.

The first thing she needs to do is determine what debt she is an authorized user on and what she is a codebtor on. The colection agencies will lie to you. Make them send you proof that she gave her social security number and signed a credit card agreement. Send each cc or colection agency a letter requesting validation of the debt.

As for doing anything about the ex spouses bankruptcy there is really little you can do. I am wondering what exactly the lawyer she hired told you he could do. The ex did everything correctly. He is legally entitled to declare bankruptcy and get his chance to start over and do it right. No matter how he racked up the debt he does have the legal right to a fresh start.

Most of us here made mistakes. We have honestly decided to declare to the world that we screwed up. We are dealing with the consequenses. No one on this board arrived at the decision to file bankruptcy without a lot of tears. As someone else mentioned, be thankful we are willing to help and watch how many stones you throw.

[gfgettngscrwd]

Really two people being co-debtors on a credit card is not that common. I have my cards and my husband is an authorized user. He has his cards and I am an authorized user. The first thing she needs to do is determine what debt she is an authorized user on and what she is a co debtor on. The collection agencies will lie to you. Make them send you proof that she gave her social security number and signed a credit card agreement. Send each cc or collection agency a letter requesting validation of the debt. The first thing she needs to do is determine what debt she is an authorized user on and what she is a co debtor on. The collection agencies will lie to you. Make them send you proof that she gave her social security number and signed a credit card agreement. Send each cc or collection agency a letter requesting validation of the debt.

Actually this is one of the most helpful things anyone has said so far. We were already heading done that path but the implementation is the tricky part. All of the creditors have not yet begun to call. Our fear is that by contacting them and asking these questions, we may be in fact opening ourselves to more exposure/liability.

As for doing anything about the ex spouses’ bankruptcy there is really little you can do.

I am not sure that is entirely true, but the question is will anything we do actually help our matter? We believe we have enough information to have the bankruptcy thrown out on a few legal issues; however this may or may not be in our best interest.

I am wondering what exactly the lawyer she hired told you he could do.

One of the things was getting the amount listed owed to her changed. As it stands now she is listed as creditor but with a $0.00 balance. Any amount that she has to eventually pay as a result of this is money he was responsible for via the divorce settlement and her credit amount should reflect this. Furthermore, if one of the creditors on one of the joint account does not file a claim thereby releasing him of any obligation to pay that creditor and that same creditor in turns comes after her to satisfy that debt, that amount needs to be added to her total. For example, chase visa with a theoretical balance of 10k does not file a claim against the ex releasing him from obligation, instead they just turn their collection attempts fully at her, if she is forced to assume any portion of his divorce settlement debt, she should be listed as a creditor for that amount and get at least a portion of it back.

The ex did everything correctly. He is legally entitled to declare bankruptcy and get his chance to start over and do it right. No matter how he racked up the debt he does have the legal right to a fresh start.

While it appears he has the legal right, others have suggested he has the moral right as well. To this I would like to say, not if it comes at an innocent parties expense and places the innocent party in a worse position than he is in. Look, if all this could be done without affecting her, one who has lived up to her part of the divorce decree, then we would have no issue with this. As it currently stands, he made $60,000 + last year but on his projected income this year he is stating to only make 50,000 k. (I will have a very specific question to this in my next post). The man would have been making upwards of 120,000 if not for the fact he was caught embezzling company funds, forced to resign and pay back 10k in restitution to his employer and had to sign a no-compete clause in that field as a result of the settlement. He then had to take a much lesser paying job as a result in a completly differnent field. And, the 10k to pay the employer back was taken from two large cash advances on the credit cards he know is filing bankruptcy on. Bankruptcy law clearly states that any debt occurred as a result of a crime, fraud, etc is not dischargeable. The thing is we are still researching whether or not it would be in her best interest to bring this fact up (and yes we have the actual legal settlement to prove her claim).

Most of us here made mistakes. We have honestly decided to declare to the world that we screwed up. We are dealing with the consequences. No one on this board arrived at the decision to file bankruptcy without a lot of tears. As someone else mentioned, be thankful we are willing to help and watch how many stones you throw

Almost everyone makes mistakes. However, how many of you when filing bankruptcy left an ex spouse in this position? I am not throwing stones at anyone other that the ex and the screwed up law as it now stands.

[gfgettngscrwd]

I would know like to ask a few very specific questions.

1) Is a co-debtor stay automatic?

2) Does the bankruptcy judge have the power to force a settlement agreement on the creditors or do the creditors have to agree to it?

3) When the person in bankruptcy has a sales position and a large part of his income is commisions resulting in a greatly fluctuating monthly/yearly income how is his/her payment amount affected. For instance, last year the ex made $66,000.00. Yet this year he is claiming a projected income of ony $52,000.00. What if at the end of the year after commisions he actually makes $70,000.00? What happens?

4) If before the final ruling the co-debtor negotiates with the cc companies to pay of the cc debt out of her own pocket, Can she then assume that debt and get payed back the proposed settlement amount through the trustee? For example, assume three credit cards in which both parties are jointly responsable, each with a total of 10k. The non-filing spouse pays this debt (remember this debt was assigned to the filing spouse by divorce settlement), which in turn should mean instead of owing the cc companies a total of 30k, he know owes the non-filing spouse the same 30k. Assuming a 60% payback, through the course of five years she gets back through the trustee $18,000.00. Can this be done?

[gfgettngscrwd]

Lastly I would like to add this. Many of you think that if we/she were to do anything to prevent him from filing bankruptcy we would be causing an injustice. From this some of you might extrapolate we are out to "stick it to him", While admittedly, I may come across this way at times, the gf is not this way at all. As a matter of fact, she is probably the nicest soul I have ever met. However, if we can/do get the bankruptcy tossed out at least for a short period of time, we can then go back to civil court were her odds are much better as he is already in contempt. Our actions would then be, not to sue him, have his wages garnished or any of that, but have the divorce settlement reworded correctly (as per the change in the bankruptcy laws) in the manner in which any divorce debt which effects both party's is not dischargeable. He could then go back and file bankruptcy and his numbers would all be the same but the way the settlement money was distributed would be in a way that the joint accounts he held and was made liable for would be prioritized. This is what we would like to see happen, not to see him penniless for the rest of his life.

[rrockinggramma]

The co debtor stay is automatic. My son and I are cosigned on a car that was repo'd. I am in the chapter 13, he is not. He knows when I am discharged they can come after him for the deficiency balance but not until I am discharged. The lawyer told me this and it is listed in our Trustee handbook, that chapter 13 protects co debtors.

If he cash advanced 2 credit cards to pay back his employer, I think that makes that debt dischargeable in that once that was paid in full to the court, the crime against him was no more. The cash advance was just like any other cash advance to the credit card company. The non dischargeablity comes from having the court listed as a creditor. That would not be discharged and would have to paid in full,similar to a lawsuit against him etc.

And getting the collection agencies to prove that she indeed is a codebtor and not just an authorized user is a good idea. However while that is happening it doesn't stop those collection agencies from killing her credit report. And credit bureaus do not remove much of anything without a fight, hence my suggestion for a consumer attorney to help you with this.

And even though her debt is listed as 0.00 on his BK she has the right as a creditor to file a claim. You can download the claim form from the internet. Gather up your proof and attach it to the form and submit it to the BK court. Believe me the trustee will review it. He may file an objection which gives you a hearing date that you can attend with all of your evidence to present.

As to his income, most chapter 13's require yearly tax returns be submitted to the trustee, along with the refunds. They do review it. If his income is not around what he claimed, albeit 120,000 instead of 52,000 you can bet the trustee will be adjusting his payments.

As I see it your issue is the 15,000 incurred by him after the divorce and then paying his fair share. I wouldn't wait to see which companies file claims in his case, I would file one anyway for the amount you feel he owes her. She may only get the percentage to unsecured but it would be better than nothing, which is where you stand now.

[rrockinggramma]

If your gf does settle the debt with these companies, yes she can file the claim in his BK. Be cautious however. When debts are settled for less then the amount owed, the creditor has the right to issue a 1099 to the person who settled the debt. The IRS will treat the difference as income. So make sure any settlement includes a letter from the creditor that NO 1099 will be issued as a result of the settlement. I did that with Ford and they gladly provided that letter for me as they just wanted their money.

[gfgettngscrwd]

If he cash advanced 2 credit cards to pay back his employer, I think that makes that debt dischargeable in that once that was paid in full to the court, the crime against him was no more. The cash advance was just like any other cash advance to the credit card company. The non dischargeablity comes from having the court listed as a creditor. That would not be discharged and would have to paid in full,similar to a lawsuit against him etc.

The money was not paid to the court it was paid to his employer as re-imbursement for his fraud. It was an out of court settlement signed by each parties lawyers.

[gfgettngscrwd]

2) Does the bankruptcy judge have the power to force a settlement agreement on the creditors or do the creditors have to agree to it?

[gfgettngscrwd]

The co debtor stay is automatic. My son and I are cosigned on a car that was repo'd. I am in the chapter 13, he is not. He knows when I am discharged they can come after him for the deficiency balance but not until I am discharged. The lawyer told me this and it is listed in our Trustee handbook, that chapter 13 protects co debtors.

OK but what about a card she was primary and he was just an authorized user on that through the divorce he was made responsible? Like I said the debt was divided equally 50-50, however no attention was paid to who's name was actually on the card at the time of the divorce.

[CindyLou]

The thing is only the credit card company can object to the discharge and they may not care...just depends. You can only object to your debt not on behalf of someone else.

[gfgettngscrwd]

Huh?

[CindyLou]

The thing is only the credit card company can object to the discharge and they may not care...just depends. You can only object to your debt not on behalf of someone else.

"Bankruptcy law clearly states that any debt occurred as a result of a crime, fraud, etc is not dischargeable. The thing is we are still researching whether or not it would be in her best interest to bring this fact up (and yes we have the actual legal settlement to prove her claim)."

Sorry, I didn't quote my comment so it probably didn't make much sense. Was messing around on my handheld when I was suppose to be in a meeting!!

[HenriettaHen]

This is one of the most interesting threads I have ever read here.

Boyfriend of GFgs'd is articulate and informed, and... outraged.

This is uncharted legal territory that bloody well ought to be explored. Challenged. Charted.

Here's what HH spies out as the fat shiny breakfast bug ;

he is already in contempt. Our actions would then be, not to sue him, have his wages garnished or any of that, but have the divorce settlement reworded correctly (as per the change in the bankruptcy laws) in the manner in which any divorce debt which effects both party's is not dischargeable. He could then go back and file bankruptcy and his numbers would all be the same but the way the settlement money was distributed would be in a way that the joint accounts he held and was made liable for would be prioritized. This is what we would like to see happen, not to see him penniless for the rest of his life.

Whew! Boyfriend, I think you have the wherewithal to actually correct bad law!

It's great that you have posted so much thought here - this is how things actually get fixed. I hope that you will redirect from anger and panic to... revisiting the divorce decree with the help of an attorney.

This will be very interesting.

[gfgettngscrwd]

The thing is only the credit card company can object to the discharge and they may not care...just depends. You can only object to your debt not on behalf of someone else.

I am not so sure, not if a portion of said debt is in turn passed on to a third party who is ultimatly made liavble for the debt incurred as a result of this fraud.