AZ Filing - Spouse & other questions

[kristyf]

Hello everyone,

I'm glad I found this forum! We're at the end of our rope. We can barely cover mortgage and monthly expenses (trimmed down as much as possible) and cannot afford to pay any credit cards. So we're looking at Chapter 7. Here are my questions:

I understand the 90/70 rules (or something like that), but we recently bought our house - dec 08. Along with the house came Home Depot credit card for $1000. The house and HD cc are in my husband's name only. Also, there is one add'l credit card in his name. If we were to file jointly, would the $1000 on HomeDepot be included?

We are expecting a large (hopefully) fed tax refund. We were planning on paying a couple debts, mostly to my mom, with that money. If we file BK *after* getting return, would that be a problem? Would we have to pay back the return?

Now my biggest question - we live in AZ, a community property state. From what I understand, this means that my debt is also my husband's debt, even though the large cc's are in my name only. The paralegal I talked to said that I could file by myself, and then the CC can choose to either not fight it, or go after my spouse. This is Chase Bank. Anyone have any experience with them? Do you think they would go after my husband? Because then he would need to file as well. Which means two filing/attorney fees. Personally, I would rather just file jointly and get it over with. But convincing my husband will take some doing. Mostly it is my fault - I have the checkbook, and I am the one that tends to overspend (over all these years).

Oh yes - another Q. We recently sold a car, in dec 08, and are listed as the leinholder on the title. We will get $500 per month for the next 8 months, and will use that money to pay off our car. Do we need to include this information?

Any advice/opinions/experiences appreciated.

Thanks
kristy

[StartingOver08]

Did you just buy your house last MONTH? and you want to file BK in two months?

How did you get in over your heads in one month?

The bank, Chase, will probably open a fraud investigation on your mortgage because you will be a first year default and that is what we are experiencing here (in S FL).

I hope that the date was not correct. It would be extremely difficult to qualify for a full doc loan in Dec 2008 and then file Bk in two months later without having to justify to the mortgage company how they made such a large error in the underwriting. UNLESS there was a significate event (medical issue or job loss) that occurred right after closing to severly impact your income.

[kristyf]

Did you just buy your house last MONTH? and you want to file BK in two months?

How did you get in over your heads in one month?

The bank, Chase, will probably open a fraud investigation on your mortgage because you will be a first year default and that is what we are experiencing here (in S FL).

I hope that the date was not correct. It would be extremely difficult to qualify for a full doc loan in Dec 2008 and then file Bk in two months later without having to justify to the mortgage company how they made such a large error in the underwriting. UNLESS there was a significate event (medical issue or job loss) that occurred right after closing to severly impact your income.

Well, yes.

The mortgage is not with Chase - the credit cards are. My husband was able to qualify for the mortgage, because they didn't include MY debts. My husband is paid mostly by commission, and his checks have diminished greatly just in the last two months.

Basically the 'mistake' in underwriting is that we are jointly responsible for the debts, because we live in AZ, but they only included HIS debts for qualifying him.

??

Also, what do you mean by first year default? We would still keep paying the mortgage. Educate me please!

[StartingOver08]

Ok, now that makes more sense - you are not going to default on the mortgage, just the credit card and other debt. You need to make sure that your mortgage payments are paid right on time, especially if you are filing a CH7.

A first year default is when a borrower/buyer stops making their mortgage payments within the first 12 months after closing. Usually the lender will make the orginator buy back the loan in a first year default and the file goes into the fraud dept for investigation. This is where they check your documentation again to make sure it is authentic. (For example, your tax returns). Most of the loans originated now go thru a quality control dept before closing - so I was surprised, because your first payment for the mortgage is probably not due until Feb 1, 2009...right?

Why don't you post some of your details, income and debt so we can see what you are working with right now. You said the house is in your husbands name only? (The mortgage only or the deed and mortgage?) You need to be extra careful with your timing just because of your recent home purchase. You might have to wait a while, but lets see what your debt and income is to help you come up with a plan. Make a notation as to who has which cr card (like Home Depot - DH)

[kristyf]

Ok, now that makes more sense - you are not going to default on the mortgage, just the credit card and other debt. You need to make sure that your mortgage payments are paid right on time, especially if you are filing a CH7.

A first year default is when a borrower/buyer stops making their mortgage payments within the first 12 months after closing. Usually the lender will make the orginator buy back the loan in a first year default and the file goes into the fraud dept for investigation. This is where they check your documentation again to make sure it is authentic. (For example, your tax returns). Most of the loans originated now go thru a quality control dept before closing - so I was surprised, because your first payment for the mortgage is probably not due until Feb 1, 2009...right?

Why don't you post some of your details, income and debt so we can see what you are working with right now. You said the house is in your husbands name only? (The mortgage only or the deed and mortgage?) You need to be extra careful with your timing just because of your recent home purchase. You might have to wait a while, but lets see what your debt and income is to help you come up with a plan. Make a notation as to who has which cr card (like Home Depot - DH)

OK, whew, you scared me.

Mortgage and deed in husband's name only.

Income last year = $50000. Income this year looks a lot less. maybe $36k?

Listing debts is going to be depressing.

B of A - DH - $5200 (i think i am an authorized user as well)
Chase - Dh & me - $500
Chase - me - $24000
Chase - me - $10700
Home Depot - DH - $1000
Best Buy - DH - $500
my mother - no docs - $4800
student loan - me - $18000 (moot point)

what i'm thinking is that since we can't pay our credit cards, just stop paying them. no more dancing around, borrowing to pay, etc. use our fed refund, whatever it is, to pay my mom and get a new water heater. (is that ok?) then wait until april or so and file. i'm due in august with baby #4, and it'd be really nice to not have that stress at that time.

thanks.

[kristyf]

oh yeah.

two cars - both in husband's name only. one car owned. other car is on payments. like i mentioned earlier, my husband has a lien on a car, and we were planning on using those payments to completely pay off the car we owe on. make sense?

[StartingOver08]

Not to scare you again, but the look back period for insider payments is one year. If you pay your mom the $4800 (or really anything) the Trustee can get it back from your mom. Your mom is considered an insider. So any repayments to your mother need to be paid after the BK is discharged. DO NOT MAKE ANY PAYMENTS TO INSIDERS WITHIN 12 MONTHS OF FILING.

I am thinking out loud here for a moment - but it might make more sense for just you to file and not you and your DH. I am sure others will jump right in with their thoughts on this!

[optimistic1]

Now my biggest question - we live in AZ, a community property state. From what I understand, this means that my debt is also my husband's debt, even though the large cc's are in my name only. The paralegal I talked to said that I could file by myself, and then the CC can choose to either not fight it, or go after my spouse. This is Chase Bank. Anyone have any experience with them? Do you think they would go after my husband? Because then he would need to file as well. Which means two filing/attorney fees. Personally, I would rather just file jointly and get it over with. But convincing my husband will take some doing.

I live in AZ as well Kristy, I that is a topic that has had my interest for quite some time. There are some technicalities to this topic, that might leave your husband partially liable, but in most cases, the creditors simply would not have a case, period. If you receive a discharge, it is called a community discharge. You see, you and your husband, are one entity in the laws eyes here in AZ. If one person receives a discharge, the other is equally hypothetically or phantom discharged as well. If the creditors bothered wasting there time on suing him, they would not only be liable to be sued themselves, but they would also lose based on the BK code.

I have consulted with about 8 attorneys now on this very topic, they have assured me that this is the law, and they would lose. They also told me that most creditors and Collection agencies would just treat the debt like a non-community property state and just file it in the discharged cabinet.

Here are some links on this very topic for you to look at yourself.

http://www.irs.gov/irm/part25/ch13s04.html

Read all the way at the bottom under Discharge Provisions, hypothetical discharges.

http://www2.state.id.us/ISB/sec/bnk/BNKNewsletterMay08.pdf

Read pages 2 through 9.

http://www.krmbankruptcy.com/PracticeAreas/Bankruptcy-Divorce-Community-Property.asp

Read second paragraph

And last but not least
Please read page 250 in the NOLO Chapter 7 book, under, Postbankruptcy Attempts to Collect Debts. Third paragraph.

Now, if you are nervous about the topic, and you dont want to "roll the dice", then, by all means if your husband can file jointly, file.

[deadmonetree]

hi there in az too have you found a good attourney? we are going to be looking ourselves and want to make sure we dont waste our money on a dud.

[kristyf]

hi there in az too have you found a good attourney? we are going to be looking ourselves and want to make sure we dont waste our money on a dud.

I was going to use xx, but I haven't met him yet.

[kristyf]

Optimistic1 - I saw a lot of your other posts as well. I like the IRS website, and what it says. However, if we ever move to a non-CP state, then my husband would be liable for those debts. Also, if something happened to me and I died, then he would be liable for those debts.

The possibility of us moving from AZ is about 50/50 within the next 5 years. so i really don't know what to do.

the other thing is that i don't have any prob at all filing, but my husband really doesn't want to. but i'd rather get it all over with.

[optimistic1]

The moving part is not true, I have never read that, link me to something that states that. In a non-comm property state, you dont even have to worry about creditors trying to sue based on the false premise that they could sue him to begin with in a comm prop state. In non-comm property states, spouses generally have it easy. The dying part is true, and so is a divorce, but...

But, do you really think creditors and collection agencies are just sitting there waiting for people to divorce each other, and waiting for people to die? I think the likelihood is very low, and in that event, they would probably be beyond the statute of limitations to even collect it anyway.

You could always just stop paying on your cards, and develop a savings account and be very good about not touching it, then let the cards go seriously delinquent up until they start to send you settlement offers, and then get everything in writing and settle each account at pennies on the dollar.

If you choose to file alone here in AZ, he doesnt even have to file to discharge his debts that are in his name either, because, as long as they were incurred during the marriage, they can be included in your BK, without filing a joint petition. Hard to believe but it's true.

[keepmine]

Were I you, I'd not file until after the baby is born. You don't want something out of the ordinary to happen and be on the hook for large medical bills and you've already played the bk card.

[optimistic1]

I was going to use Mark Atchley, but I haven't met him yet.

Just a FYI, you need to read the forum rules, naming attorneys is forbidden in the forum, but feel free to private message someone.

[kristyf]

Were I you, I'd not file until after the baby is born. You don't want something out of the ordinary to happen and be on the hook for large medical bills and you've already played the bk card.

ack! i don't think i could the handle the stress for that long. we have very good insurance, i think i will have to pay 10% or so. but still, that's a lot if it ends up being a c-section.

if we stopped paying ccs now, since we can't pay anymore anyway, would we be able to go that long (7 months) without anyone suing us?