Complicated Married Wife Filing Separately on Her Own

[baker]

My wife is filing Chapter 7 on her own since all of the CC debt is solely in her name. She has been at home with the kids for the last 3 years with no income. So the attorney is going through the means test with my income only. So we get to the "marital adjustment" and he subtracts my personal payment obligations (my car lease that's in my name only, my CC payment). These deductions plus the standard IRS stuff along with subtracting my state/federal taxes keeps her in Chapter 7.

We have about $800 bucks in equity in the house and our other vehicle is worth about $4700 which is in both our names (it's paid for). So we're just nervous that the "marital adjustment" won't jive with the trustee...

Any thoughts on the situation ? Our attorney thinks it's a slam dunk Chapter 7 no asset case and should run through clean. I am of the opinion that in our case the whole point of the means test is to calculate HER disposable income, not mine since she's the one filing. If this is the case she obviously has none. Our current attorney totally agrees although the first one we consulted didn't see it that way. I asked the first idiot attorney how they expect to throw someone with no income in to a Chapter 13 payment plan and expect her to pay it. After all, it's not like they could garnish my wages to collect since I didn't file the Bankruptcy. He was wanting her to sign on to a Chapter 13 case paying $875/mo. for 4 yrs.

Others please chime in... Thanks in advance...

[baker]

Bump....

Anybody have something to contribute ???

[sportster]

I am in the same boat, same situation (except that we both work). I'll post more when I hear more from our lawyer.

[baker]

I am in the same boat, same situation (except that we both work). I'll post more when I hear more from our lawyer.

Be prepared to talk to more than one attorney. The first one we spoke to was really bent on sending her in to Chapter 13. I asked him how they'd expect HER to pay it since she's got no income. I told him it's not like they could garnish MY wages since I was not filing bankruptcy, SHE IS. He actually replied with, "I've never thought about that ??? " He was wanting her to pay $875/mo. for 4 years.

[baker]

Sorry but I'm not familiar with your situation. It seems it wouldn't be fair to have you suffer for her debt. Maybe since you're married the system treats it as both of you going through this together.

What is the exemption limit for a car in your state? If its in her name too then the trustee may try to make you both buy it back for whatever its worth minus the exemption limit. How much debt is she trying to write off? It will probably be worth buying the car back to get rid of the debt. She will also have to list assets as those may become the trustee's property too.

According to our attorney, she only owns half of the car so her "half" is under the exemption limit so we don't have to worry about the car. She has $43,000 in unsecured debt (in her name) with no secured debt. 3 CC's, that's it. Our home only has about $2000 in equity so no worries there. The one car and the house are the only things she has her name on at all. Our other car is leased but only in my name.

I was an Authorized User on 2 of the cards but have had my name removed and am checking my credit report to make sure those cards get removed from my credit report...

[StaciMM]

There are always a few ways of looking at it... First off, when did she open the accounts and did she claim 'household' income, referring to yours, in doing so? Even though she does not contribute income, the household income is to be considered (based on my understanding) if a person is married but filing alone.

[Jenny]

Is all your wife's debt from more than 3 years ago when she was working? I would think it would be difficult to explain to a trustee why she incurred debt without having any income. That's probably why a lawyer would say you might have to pay some back through a Chapter 13. If she charged stuff while not working, obviously she expected you to pay for it. Or did she hide the charging from you?

[StaciMM]

Jenny makes a good point. A side note of that, is that if the debt was accumulated when she had no income, the creditors could argue fraud. (Credit card fraud includes situations when you make charges without having both the intent and ability to pay back. If you make charges knowing that you have no income, and therefore can't pay it back, that is fraudulent. Her defense would be that she used household income.)

[baker]

The credit was issued to her when she was working and based on her own income at the time... There has been no attempt on the creditor's part to verify her continued income. Bottom line I have never heard of the issues you guys are bringing up being raised by a trustee. I have been the one essentially making the payments on the card since she hasn't been working. All of the payments have been on time up till the point we decided to file. It would be pretty difficult for the creditors to make a fraud case with the payments always being made on time through the entire period she has not been working... Which by the way has been 3 years.

According to the Bankruptcy laws the only fraud accusation that can be made would be in the cases of large purchases being made in the months prior to filing or if some type of false information was made on the credit application. So if what you guys are telling me is true, then a working mother who jointly applied for a mortage with her husband using her income at the time would be guilty of fraud if she decided to quit work to stay with her children. I don't think it works that way. I couldn't see how a fraud case (i.e. no intent to repay) when the payments have been made on time for 3 years...

Even if she had used household income on application doesn't make me liable for the debt. The cards were issued to her, in her name... Bottom line, they (MBNA) issued $40,000 worth of credit to someone making $15/hr. and you guys think that the credit card companies are going to have the nuts to go after her for fraud ??? Geez, I think the CC company would likely get their hand slapped for stupid lending practices. If I were the trustee I believe I'd let the CC company eat it just for being stupid.

[StaciMM]

Bankruptcy fraud and credit card fraud (the legal definition is what I referred to above) are 2 different things, and we're really only qualified to give you things to ponder and to ask a qualified bankruptcy attorney about.

[baker]

Bankruptcy fraud and credit card fraud (the legal definition is what I referred to above) are 2 different things, and we're really only qualified to give you things to ponder and to ask a qualified bankruptcy attorney about.

I guess what I was getting at is the fact that if everyone that got in to credit card trouble while not working was assumed to be fraudulent it would pretty much eliminate 80% of the people in BK court and on this discussion forum. So I guess what I'll ask you is that if the information on my wife's credit card application was correct at the time then how could they accuse any type of fraud? Do they expect you to cut up your credit card when you stop working or lose your job. I don't think so. Like I said if that was the case we are all screwed. Likewise if your wife decides to stop working after having children because it would be more expensive to pay for daycare than what her income would bring in she should have her name removed from the home ??? What are you saying ? I don't mean to give you a hard time but if you are going to suggest that our situation is somehow fraudulent I would assume you'd have some type of information to support it ?

She was issued those cards on the basis of her outstanding credit at the time of issuance and considering her income at the time. Even if she accumulated the debt after she stopped working the payments were made towards the account for 3 years.

None of the attorneys we spoke to ever mentioned any problem to this effect, the only debate was how my income now would affect the means test and her ability to file Chapter 7. It all basically comes down to the interpretation of the "marital adjustment" when calculating CMI (current monthly income). None of the attorneys are exactly sure how to figure this out since there is absolutely zero case law under the BK Reform Act of 2005. My attorney just said that legally speaking these are my wife's debts and the whole purpose of the means test is to calculate HER (in our case) disposable income. They then shall use this to figure out (1) if she qualifies for Chapter 7 and (2) if not, how her Chapter 13 should play out...

[SinkingFast]

Oh, gosh, Staci's comments are scaring me now too. We charged necessities when Hubby was unemployed and during the time we've been supporting 2 households the last year. All the while thinking when we sold the house, we'd clear enough to knock out a ton of the debt. Charges made in good faith with every intent to pay back people at the time we charged things. Of course the house didn't sell. Plus, we paid nearly $15000 in mortgage payments, utilities bills, and maintenance to a guy to mow our place thru the fall. And we've had to drop the price several times, to the point we're at break even to pay the mortgage and all costs. Now I worry about CC fraud accusations. Great!

About the CC's and your wife,.......... Have you pulled your credit reports??

All the attnys we've Consulted with want to see a copy of our CR's. You may be surprised to find that your wife is not the sole person on the CC's anymore.

I had several CC offers come to me, in my name, over the years. I was working temp jobs, or part time work. In recent years, I haven't worked at all. These weren't applications for CC's. These were pre-Approved CC offers. I took the CC's because I wanted to have my own credit history in case something happened to Hubby. Because they were offered to me, in my name, I am the primary on the accts, I'm the only authorized user on a couple, and Hubby's an authorized user on one, I thought the CC's were my accts.

We got our Credit Reports a couple weeks ago. Guess what??!! I only have one CC in my name only. A department store line of credit. Every one of my Visa, MC type CC's shows on Hubby's Credit Report also as part of his credit history. Even tho Hubby cannot even use a couple of the cards to charge anything, they are being reported in his credit history. At some point, those CC's became "joint".

As far as the car goes, if the title is in both names, your wife "owns" half the equity. Your State's vehicle exemption may be enough to cover her half of the car. You'll have to check on your State's exemptions limits to know for sure.

[baker]

About the CC's and your wife,.......... Have you pulled your credit reports??

All the attnys we've Consulted with want to see a copy of our CR's. You may be surprised to find that your wife is not the sole person on the CC's anymore.

I had several CC offers come to me, in my name, over the years. I was working temp jobs, or part time work. In recent years, I haven't worked at all. These weren't applications for CC's. These were pre-Approved CC offers. I took the CC's because I wanted to have my own credit history in case something happened to Hubby. Because they were offered to me, in my name, I am the primary on the accts, I'm the only authorized user on a couple, and Hubby's an authorized user on one, I thought the CC's were my accts.

We got our Credit Reports a couple weeks ago. Guess what??!! I only have one CC in my name only. A department store line of credit. Every one of my Visa, MC type CC's shows on Hubby's Credit Report also as part of his credit history. Even tho Hubby cannot even use a couple of the cards to charge anything, they are being reported in his credit history. At some point, those CC's became "joint".

As far as the car goes, if the title is in both names, your wife "owns" half the equity. Your State's vehicle exemption may be enough to cover her half of the car. You'll have to check on your State's exemptions limits to know for sure.

This is a common point of confusion.

In my case 2 of her cards I had been an "Authorized User" which means I had my own card, but she was still soley responsible for any charges made on the account. Since we were married the 2 accounts appeared on my credit report but were properly noted as "AU" for Authorized User. But this does not in any way make me responsible for the account, even if I had run up any of the debt. My attorney told me to call MBNA and have my name removed from the accounts and within 30 days they will both disappear from my credit report. If I didn't do this then her BK or late payments would in fact hurt my credit score/report. There evidently has been litigation against the credit card companies in which an authorized user sued for having their credit hurt by the account holder's late payments, BK, etc... He just told me that if they do not get it cleared from my credit report to let him know and he'd get it taken care of.

[StaciMM]

Legal definitions are just that, legal definitions. I doubt that many creditors are going to put much effort into filing legal charges against people for credit card fraud unless they have a slam dunk case, it is large amounts, and the person has alot to lose. (Property, etc.) What I'm getting at is if you want to use the arguement that your wife has not had income for 3+ years and your income should not be considered in her bankruptcy, then you might be bringing trouble on yourself. A little like a person complaining to the police that they hired a hitman and he took the money and ran. (That really did happen in the local news a few months ago.)

[StaciMM]

PS-you're not expected to use credit if you don't have BOTH the intent and ability to repay it. In my opinion, that is not completely black and white. I don't know if having reason to think you'll have the ability soon is enough for example. But, if someone does not have income and knows that will not change...