Chapter 13 vs. Divorce Debt

[JRTLover]

GFGS, I think your best avenue would be to make the ex-spouse abide by the divorce decree, rather than trying to go through the convoluted bankruptcy law. Many people here have good advice regarding bankruptcy law, but really you should be attacking this from the divorce law angle. Bankruptcy law is not really going to help. Except, I do see that 15,000 that he racked up, may be challenged as fraud if it was just prior to his filing date.

As someone previously pointed out, these two courts operate independently (with Federal Bankruptcy Court having authority over others).

[JRTLover]

Also, as an aside, before Hurricane Katrina took my books, I had a "....for dummies" book: "Personal Bankruptcy for Dummies" that was great information to have just before I filed in Sept. 2004 (old law). I bet it has been updated. I'd check Amazon.com and get it. It had good "what if" scenarios.

[CindyLou]

GFGS, I think your best avenue would be to make the ex-spouse abide by the divorce decree.............................but really you should be attacking this from the divorce law angle. Bankruptcy law is not really going to help. .

I TOTALLY agree!!! You cannot attack this from the bankrutpcy law angle. The ONLY thing you can attack in the bankruptcy is to object as a creditor and only on the debt that he has claimed that he owes her. You cannot object to other debts...only those creditors can. For example you cannot cry fraud on another creditors debt. I think I've said this before so I'll stop and bow out of the thread. I just feel like the same things keep getting said over and over again. Good luck. I really feel bad for your gf and I am sorrry that she if going through this. She seems like a really good person and you seem like a really nice guy for trying to help her like this. God Bless.

[aa06a47]

Here is my advise.

1) Forget the witch hunt on the X. The 50-100 bucks a month he may have in padding will hopefully allow him to suceed in paying 60% of his debt.
2) On a personal note, if your coaching her on how to get back at him...fraud...expenses...etc, she may end up hating you in the end. Relationships, even with x spouses, can be trickey.
3) The new bankruptcy law does not allow someone to discharge debts that were part of a divorce settlement....should have been the first question the lawyer asked her x when he said he was divorced. Therefore, there is no case at all against your girlfriend. All her attorney has to do is produce a copy of the divorce decree. So, the debt he owes on those credit cards (hope they are spelled out in the divorce decree) cannot be discharged, and she should not be responsible for paying them.

[aa06a47]

http://www.law.cornell.edu/uscode/search/display.html?terms=divorce&url=/uscode/html/uscode11/usc_sec_11_00000523----000-.html

[lrprn]

aa is right. The bk law is on your gf's side as long as the divorce decree clearly spells out who is reponsible for which debt.

However, for the bk court of her ex to know this, she as a creditor MUST file a claim within 90 days of his 341 meeting to even have a seat at the table. She may have to file an objection to remove herself from what he says she owes if the divorce decree says otherwise. That's why she needs a bk attorney also familiar with divorce or set up her divorce attorney to discuss the situation with a bk attorney.

(And btw, yes, a creditor can be listed with $0 owed in Ch 13. This happens when filers are trying not to miss wiping out any potential debts owed that may be claimed by the creditor after the bankruptcy is over.)

[gfgettngscrwd]

Cindylynnsmith, aa06a47


I am sorry to inform you that you are both incorrect. Divorce debt is dischargeable under chapter 13. Please stop ringing this bell; you’re quite simply, WRONG! Both her divorce attorney and her bankruptcy attorney have confirmed this. I do however wish you were right. When you offer advice on a forum such as this, it is advisable to be sure of your facts first; otherwise you could very well inadvertently lead someone down the wrong path leading to disastrous results. If you would like me to provide you with links I will. The only divorce debt that is not dischargeable is that of support under 13.

[gfgettngscrwd]

I TOTALLY agree!!! You cannot attack this from the bankrutpcy law angle. The ONLY thing you can attack in the bankruptcy is to object as a creditor and only on the debt that he has claimed that he owes her. You cannot object to other debts...only those creditors can. For example you cannot cry fraud on another creditors debt.

You’re not quite grasping this. I understand what you are saying, but it’s quite a bit more complicated than that. As a co-debtor, the credit card companies have the right to come after the non-filing party for whatever balances the bankruptcy settlement does not cover. So in the case of a 10k debt with a 60% payback (these numbers are theoretical for purpose of easy math). The co-debtor can be held responsible for 4k of that debt after the filing party has been discharged. Assuming that a co-debtor stay is in place, after his bankruptcy is discharged, they can then come after her. And through that whole five year period, her credit is destroyed, not just his. So in all actuality, since that 10k debt was incurred as a result of fraud and part of it she will eventually be responsible for she is a creditor for at least that amount.

That’s assuming that the she is listed as a co-debtor on that card. It gets even more complicated when she is listed as a primary and he only an authorized user and the divorce settlement assigned that debt to him. The credit card company is under no obligation to take any settlement agreement from the bankruptcy proceedings and can turn their full collection attempts at her.

[gfgettngscrwd]

GFGS, I think your best avenue would be to make the ex-spouse abide by the divorce decree, rather than trying to go through the convoluted bankruptcy law. Many people here have good advice regarding bankruptcy law, but really you should be attacking this from the divorce law angle.

I wish it was that easy. However bankruptcy (federal) takes precedence over anything we can do in civil court. Once the bankruptcy is approved, nothing we can do in civil court will do anything. That is why this must be dealt with in bankruptcy court not civil court. Sure she could go to civil court, find him in contempt, have his paddies’ slapped, but the bankruptcy would prevent any collection attempts (remember she is listed as a creditor).

[gfgettngscrwd]

rrockinggramma Said

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.

You have offered some sound advice and seem to know what you are talking about. Thank You. I have another question on this as well. If the co-debtor stay is automatic, can the credit card companies/lender accrue interest on the non-filing co-debtor?

[gfgettngscrwd]

Ok let me give you some more detail as some of you I believe don't quite understand. The divorce Decree seperated the marital debt as follows:

To the Ex-husband:

1) Amex (co-debtor/authorized user status unknown)
2) Chase (1) (ex wife is primary ex husband authorized user)
3) Chase (2) (co-debtor/authorized user status unknown but we believe she is only an authorized user)
4) CitiBank (co-debtor/authorized user status unkown but we believe she is primary and he only authorized user)
5) NBNA (co-debtor/authorized user status unknown but we believe she is only an authorized user)

At the time the divorce was final this debt totalled 58-60k. As it now stands this debt is over 70K. He has more post divorce debt as well, but for this purpose we will only examine the divorce settlement debt and not any additional debt incurred post divorce.


To the Ex wife:

1) JcPenny (paid off post divorce)
2) Marshal fields (paid off post divorce)
3) Kohls (paid off post divorce)
4) Disocover (she is primary he is authorized user)
5) Citibank (he is primary she was co-signer)
6) Capitol One (primary/authorized user status unknown)
7) Student loan debt


At the time of divorce was final this debt totaled 58-60K. All this debt is current and in good standing. The debt was divided in such a way that the difference was 400 dollars. Unfortunately as a result, not much attention was paid to who was primary on what card etc, and as it now stands she has some debt in which he is primary and he is only an authorized user and he has some were she is primary and he is only an authorized user. As to why she needs a lawyer I will now explain.

From what she believes and is in the process of researching is that 2-3 of the cards he is now responsible for she is the primary and he is only an authorized user. While he listed these cards on his filing, these cards are under no obligation to recognize his bankruptcy (my wording of the situation may be off). As a result, these cc companies most likely will not file a claim in his bankruptcy, rather they will turn their full attention on the gf for collection. One of these cards, Chase, has already said as much. If they don't file a claim, under law, he is discharged of this debt. This means she will then be held responsible for the full amount. In order for the gf to at least get some restitution, she needs to have the debt listed in the bankruptcy for these specific cards removed from them and added to her. It doesn't change anything in the totals for his bankruptcy, just changes who the creditor actually is. I believe this was a legal maneuver by his attorney that knew full well these cards would most likely not file a claim. Furthermore, the additional 10-15k that he amassed after the divorce was final maybe in part un-dischargeable as it was in violation of a specific provision in the divorce decree.

[gfgettngscrwd]

aa is right. The bk law is on your gf's side as long as the divorce decree clearly spells out who is reponsible for which debt.

Unfortunately, under the current law, it is quite specific as to how the wording is supposed to be to be non-dischargeable debt. It must meet 4 provisions. Unfortunately, hers meets only three and pre-dates the change in the bankruptcy law by a month. Oddly enough, the change in the bankruptcy law seems to invalidate most if not nerely all the intent of the divorce settlements prior to its adoption. I don't see how this can be, but as many of you have said, its bad law.

[gfgettngscrwd]

For those of you insisting that the divorce debt is non-dischargable:

https://www.jacksonvillebankruptcy.com/chapter13advantages.htm

5. Divorce Related Debt - If a divorce has taken place prior to a bankruptcy filing, Chapter 13 may afford the debtor relief that may not be available in Chapter 7 as to debt from the marriage that the debtor was required to pay as part of the divorce settlement or the court's ruling. This type of obligation imposed on one of the parties to the divorce is referred to in bankruptcy and divorce law as part of the "property settlement." A debtor who seeks to get this obligation discharged may have to litigate in Chapter 7 to obtain a determination whether or not this ought to be permitted. In Chapter 13, if the debt is determined to be part of the property settlement, it will be treated just like any other unsecured debt, and the court will not force the debtor to pay it or hold it to be non-dischargeable. If this issue is present, legal counsel should be sought to weigh the advantages and disadvantages of Chapter 7 versus Chapter 13, including how the divorce-related debt issue would factor in.

Better yet this is where your confusion lies:

http://www.forbes.com/personalfinanc...money_inl.html

Unlike the old law (BRA) which, as amended in 1984, allowed debtors to discharge nonsecured property settlement obligations to former spouses (think payouts for businesses, professional practices, or other assets distributed in a divorce), the new law forbids this. Now, any domestic support obligation “DSO” becomes a “first priority claim,” ineligible for discharge.


Still, scholars see potential areas of abuse. If you have a property agreement or divorce decree wherein your ex assumes existing marital debt (outstanding credit cards run up during your marriage) and agrees to pay the credit card companies directly--“holding you harmless” in the meantime--beware. That obligation might be subject to discharge or reduced payment under the new bankruptcy law. Why? Payments made to a third party, i.e., someone other than, “a spouse, former spouse or child of the debtor” might not receive protection under the new 11 U.S.C. 523(a) (15). (For an excellent article on the details of this danger, log on here.)
On the other hand, any obligation undertaken in a divorce, owed to a third party and in the nature of support (say, an ongoing mortgage or auto loan) is probably safe from discharge under BAPCPA. Best idea: Insist on having your spouse pay old, nonsecured consumer debt, directly, from his--or her--share of money received from the sale of a house or distribution of other assets at the time of the divorce. A promise to pay is nice, but security (or cash) is king.

BAPCPA also provides “domestic support obligations” first priority status over other nonsecured debt. (But, this fact might not be as useful as it sounds as BAPCPA expands the reach and strength of secured creditors. So, it’s possible less will be left for all unsecured creditors, regardless of priority status.) Furthermore, the automatic stay provisions of the code no longer apply to divorce or support actions filed in state courts. Though you won’t be able to divide the debtor’s property, you will be able to address support, domestic violence and custody matters without having to appear in federal bankruptcy court to “lift” the stay.

[aa06a47]

If you know everything, why are you asking questions? The code seems pretty clear to me on the issue, however, if your attorney / judge / trustee interprets it otherwise, then that is why you should never take the advice you see on a free board and as always consult an attorney.

According to your research, your gf is definatly getting screwed. My advise,.... If your sure of your intrepretation, she should file BK herself.

[aa06a47]

I do have to add one thing, when I filed, since I was divorced, they had to have a copy of my divorce decree and when I asked why, my attorney stated that if I had agreed to pay any of the debt in the divorce decree, I was still obligated to do so. Perhaps it is a Missouri intrepretation...who knows.