Filing alone when married in a community property state

[tomato]

I've been lurking around for a little while, trying to find an answer to my question, but I haven't found anything that applies to my specific situation yet. I'm kind of afraid I know what the answer is already, but...well, here goes.

I have a bit under $80k of credit card debt, all acquired over the last 3 years. I started a business solely financed on personal credit cards (and boy, have I ever learned my lesson about that), and never managed to turn a profit. All the cards are in my name, with my husband as an authorized user (though I've called them all over the last couple of days to remove him, just in case). All the charges on the cards were made solely by me--my husband never had anything to do with the business, though his name was on the LLC paperwork as a "just in case" measure, so that he could take care of things for me in case of emergency.

My questions are as follows:

a) I live in California, and from what I've read, the credit card companies can go after him for the debt even if I file Chapter 7 bankruptcy. Does it make a difference that I was the only one making the charges? I even had a separate bank account for the business that the bills were paid from, and I'm pretty sure his name isn't even on that account.

b) Neither of us have any assets, apart from a car worth about $3500. If the credit card companies were to go after him for the money, how would that work? Would they just send him the bills, garnish his wages, or something else?

c) The main reason that I want to file without him is that he's the one with the income, and we're planning on moving out of state in the coming months. I'm really worried about our ability to find a good apartment with a bankruptcy on the record, so I thought it would be nice if he was able to qualify for an apartment without needing to count my income or credit history. Does anyone have any experience with apartment-hunting after a bankruptcy? How hard is it to qualify?

I'd like to file Pro Se if possible, but I'm meeting with a lawyer in a couple of days, and I'll definitely be bringing all this up with him. But I'm the sort of person who worries endlessly when questions are unanswered, so it would really help ease my mind if I had some idea what to expect before I went in. Thanks in advance!

[hnhlvr]

Hi,

From what I gather (and have read), you CAN find a place to rent after filing ch. 7, however, you may need to provide first and last months' rent plus a larger deposit. If you look through Craig's List, you can see that some ads include "bad credit okay," and other similar phrases that will help you guage what sort of places you can find in your situation.

I'm very new here to this forum (just joined a few days back) but do know that if you file, your husband should file too since the banks CAN come after him!

Are you moving to a non-community state? Maybe someone can answer a question I would ask, which is: can you file in THAT non-community state and then your husband won't need to be included in the bankruptcy? That does seem too good to be true, but hopefully someone with experience can chime in.

[Joe Farmer]

A potential mistake in renting before discharge:

My state allows only $1500 in prepaid rent as an exemption. So if I WERE to have given first, last and deposit then filed, I would have exceeded that limit and I am sure the trustee would recover the excess from the landlord....be leary of your timing, exemptions, etc....YIKES! I have started to keep a running list of do's and don'ts, and certain timeframes, etc. to keep it all on track while I prepare for my own filing.

[JRScott]

Tomato you probably need to hire a competent bk lawyer. If the debt is primarily business you will need to show that even if the cards are in your name.

As for what they could do if they go after your husband they could garnish his wages, seize bank funds, or put liens against property depending on what they sought in court.

I would not stop at just seeing 1 lawyer, you need to see 3-4 and open everything up to them and see what they say.

[TEW]

This is an email my Lawyer sent me the other day


You could probably eek out until the beginning of the year before the foreclosure sale BUT we need to have a rental agreement and at least one payment in place before filing so that we can put that payment in your monthly budget. You don't necessarily have to have everything moved right away, but we need to have that budget item. So timing will depend on how soon the numbers xxxxxx runs will allow you to file.

I'm not sure if that helps or not

[danaf]

I filed solo in a community property state. BUT - I am newly married, the majority of the debt was mine to begin with, and my husband was never on any of my cards - ever....nor my bank accounts. I wanted him to file but he didn't want to. And I consulted many attorneys about this.

People say that the cc's can go after him however I've researched this and they cannot go after community property ever for the debts I'm discharging....this includes paychecks while we are married. The bk protects all community property. So that would mean they'd have to go after his sole & separate property before the sol. He doesn't really have anything so they'd be out of luck there. Here is an interesting link to a case in the 9th circuit court of appeals that supports what I've said (hopefully I've understood it correctly)....

http://www.ca9.uscourts.gov/web/bap.nsf/F261D6E4B839EE2E8825739A0004C2B1/$file/Kimmel-07-1152.pdf?openelement

If you've been married for years, I'd definately consult some attorneys to get a feel for what is possible.

Also - if you are planning on moving out of state to a non community property state - it might be best to wait this out until you are settled down. This way finding a place won't be an issue and the worries that come with filing solo in a c property state won't be an issue either. I think you have to be in a new state for 120 days before you can file. And the other thing you might want to consider are the exemptions in CA vs the new state and which will best protect what you do have. It's a lot to think about so I'm glad you are doing your research.

[tomato]

Thanks for the replies--you've given me a lot to think about when I talk to the lawyer!

People say that the cc's can go after him however I've researched this and they cannot go after community property ever for the debts I'm discharging....this includes paychecks while we are married. The bk protects all community property. So that would mean they'd have to go after his sole & separate property before the sol. He doesn't really have anything so they'd be out of luck there.

Is this just because your debt was acquired before the marriage, or is it a standard thing? Our situation is very similar--hubby didn't come into the marriage owning anything but the clothes on his back--so if the creditors can't go after community property at all, that would be wonderful news. But if they can go after community property for community debt (which I'm pretty sure is what my debt qualifies as), then I suppose he'll have to file with me.

Also - if you are planning on moving out of state to a non community property state - it might be best to wait this out until you are settled down.

This is a good thing to consider. I was able to find this bit of legal code which seems to say that we'd have wait at least 90 days after moving. ("for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period than the domicile...of such person were located in any other district") We're considering moving to Oregon, which is not a community property state, so that could help us out.

But the idea of waiting until we move and then waiting another three months is agonizing! I just want to get this ordeal over with...

[danaf]

I may be wrong but the community property is already implied in the petition when filing in a c property state, even when just one spouse files. In otherwords, creditors will have 60 days to file an objection to your bk petition - afterwhich, if they do not - then they can no longer go after c property. And also, you cannot pick and choose which debt to include in the bk - it has to be all debt for both you and spouse if you are filing in a c property state. So all debt acquired during marriage has to be included as well debt you acquired on your own before marriage.

I'm definitely not an expert. I wanted my husband to file but he didn't want to simply because he didn't want to ruin his credit. I don't think my filing was standard in that most couples file together in a c property state just to be on the safe side. I filed because I had to. We'll just have to deal with whatever roadblocks turn up in the future & keep our fingers crossed that none do turn up.

Check with some lawyers. Please come back and let us know what you find out.

[southernbelle]

I filed solo in a community property state. BUT - I am newly married, the majority of the debt was mine to begin with, and my husband was never on any of my cards - ever....nor my bank accounts. I wanted him to file but he didn't want to. And I consulted many attorneys about this.

People say that the cc's can go after him however I've researched this and they cannot go after community property ever for the debts I'm discharging....this includes paychecks while we are married. The bk protects all community property. So that would mean they'd have to go after his sole & separate property before the sol. He doesn't really have anything so they'd be out of luck there. Here is an interesting link to a case in the 9th circuit court of appeals that supports what I've said (hopefully I've understood it correctly)....

http://www.ca9.uscourts.gov/web/bap.nsf/F261D6E4B839EE2E8825739A0004C2B1/$file/Kimmel-07-1152.pdf?openelement

If you've been married for years, I'd definately consult some attorneys to get a feel for what is possible.

Also - if you are planning on moving out of state to a non community property state - it might be best to wait this out until you are settled down. This way finding a place won't be an issue and the worries that come with filing solo in a c property state won't be an issue either. I think you have to be in a new state for 120 days before you can file. And the other thing you might want to consider are the exemptions in CA vs the new state and which will best protect what you do have. It's a lot to think about so I'm glad you are doing your research.

Danaf, I have a stupid question. Since you are newly married and the debt was acquired before you were married, would the creditors only be able to go after community property to satisfy those debts? And when I say community property I mean things acquired after you two were married.

What if your new husband owned a house/car/retirment accounts/boat, etc. before you were married? In that case because he owned it before you were married, it isn't community property because it was his before the marriage solely in his name and would be protected from creditors and he wouldn't need to file BK or worry about creditors going after his stuff right? They could only go after what you two accumulated while married right?

I guess I'm trying to figure out how his sole and separate property would even be in jeapordy if he owned it prior to the marriage because I remember my divorce atty. telling me my house was mine outright even though I live in a community property state because it was purchased before we were married so the timing of the purchases in a community property state seem to make the difference with respect to who owns what which should affect what creditors can potentially go after.

Sorry sometimes it takes me a while to get this stuff.

[danaf]

see below

[danaf]

SB - they could go after non-exempt c property but I think only during the 60 day period. I forgot to mention non-exempt c property. Actually, the trustee would do that on behalf of the creditors.

Insofar as sole & separate property of the non-filing spouse, I know creditors can go after for the up to the sol period. And you are right about divorce. But the question of the month is how trustees deal with it because if you recall, my trustee wanted to know if my husband owned anything which really surprised me. He doesn't own anything of great value so if she goes after the junk items he owns, they won't fetch much money. I'm waiting to hear back and I'll post about it. I'm thinking that she just wanted to make sure he doesn't own a brand new 07/08 souped up truck or something. But who knows? BK is federal, divorce is state - maybe she does have the right to liquidate his sole & separate property even though he didn't file. It seems strange to me but if it does happen, won't be the end of the world.

[southernbelle]

Wow. That's shocking to know becasue in my mind I guess I've always thought of community property in terms of how the state rules govern who owns what and when it was obtained. That's good information to know because I guess I thought the c prop rules were the same for state and federal and that his stuff wouldn't be considered c prop if obtained before marriage.

Man, I'm also shocked that creditors can hound the non-filing spouse and hold him/her liable for the remainder of the sol even if he isn't co-signer on any of the debt (still thinking in terms of state c prop laws). I'm also assuming this is for Chapter 7 and not 13 since the debt isn't being repaid at all.

That's good information. Thanks again. I learn something new everyday. Good luck and keep us posted.

[tomato]

I had my first meeting with a lawyer today. When I asked him about it, this is how he explained it to me:

The CC companies would have every right to go after my husband's paychecks (community property) to settle my CC debt (community debt). However, because only a few states are community property states, and the CC companies aren't often located in those states, they often treat people in community property states as if they weren't in community property states. So they could go after him, but it's entirely possible they wouldn't.

In our case, about $9k of our debt is on joint credit cards anyway, so it probably makes more sense for us to just file together. I haven't been thinking of it as that much money, because it looks so small compared to the rest of the debt. But really, do we want to go through all this and still be saddled with $9k? Especially when during the whole process we'd be worrying about whether the CC companies would decide to go after him and force him to file later anyway?

There was a problem with the scheduling today, so he had to cut our meeting a little short, but we're going back in on Monday. I'm hoping we can get the ball rolling right away--I can't wait to have this whole thing behind me!

[danaf]

I think it is best to file together. The c property states are complicated and I don't think there are many definitive answers out there on filing solo because most do file jointly and wisely so. I just happen to have a stubborn husband. Either we will be lucky or he'll be forced to file in the future. Only time will tell.

One lawyer told me is that the big cc companies aren't likely to break out what debt occurred when - eg before marriage or after. I'd be worried if it was a small time creditor. They are the one's that typically cause people headaches.

The link I posted above says that community property cannot be touched by creditors even if only one spouse files - unless I misunderstood. Paychecks are community property while married in a c property state. I'll have to do some more research into this area.

[liz417]

Hi there,

Sounds like you guys need a fresh start. Meet with the lawyer again and discuss filing together.

Good Luck!