Paying off wife's CC - will the trustee want that money back ?

[XiliX]

Hi -

I am in LA County, California planning to file CH 7 next month. I am married, but it's only me filing.

As my wife lost her job recently, I have been paying off her 2 credit cards for the last few months. (About 6K total, monthly payments = $130 total).

After my BK goes thru, I should be able to pay off my wife's cards alot faster.

Here's a question though:

Can/should I include the payments I've been making on my wife's CC ?
Will I have to pay back the money I've already paid on them ?

Thanks in advance.

- XiliX

[despritfreya]

You live in a community property state. Your wife's credit card IS YOUR credit card if it was used anytime after you got married. It needs to be listed in your bk. In addition, each and every debt your wife has needs to be listed. If the debt was incurred during your marriage it is your debt. The only exceptions are the purchase of real estate and any personal guarantee such as one would have with a corporate business loan. In those two situations, to bind the community, both spouses must sign.

As to paying off YOUR credit card after the bk is over, you can voluntarily pay any creditor. However, the card will most likely be cancelled by the creditor.

Your Trustee will recover from the creditor funds paid in the 90 days prior to filing that, in total, exceed $600.00 - which you must disclose - see question 3 in the Statement of Financial Affairs.

Des.

[XiliX]

Des -

Thanks for the quick reply. One follow up question:
Since I'll be listing my wife's CCs, will this effect her credit ? I was really trying to avoid that since her credit is fairly decent at the moment.

Thanks again,

- Xilix

[despritfreya]

Since I'll be listing my wife's CCs, will this effect her credit ?

I suspect so but I don't know much about credit reports. I can tell you that I have had more than my share of clients who believed if one spouse did not file that spouse’s credit would not be impacted that much and such would help down the road. I just don’t know if the theory works.

The advantage is that you will obtain a "community discharge". This means, that while a creditor could sue your wife it will not be able to collect so long as you remain married to her and she does not acquire sole and separate assets such as real estate or an inheritance. The disadvantage is that the moment the community is severed (divorce or death), the creditor will be free to collect (barring any statute of limitations issues). Should that happen, the simple answer is that she files bk at that time.

Des.

[AngelinaCat]

Xilix:

Welcome to the Forum. Please re-read Des' response to your question. Unless I read it very wrong, I understood that your wife's credit WILL be harmed. You are in a Community Property state. Any debt since the day you married, are yours jointly. You might be able squeak by if all her CC debt was BEFORE you married.

I am sure Des will follow up. ETA: Des got in ahead of me.

Good luck to you!

PS: I also was going to ask why don't you both file, but decided against it. Des answered that one too.

[frogger]

Des -

Thanks for the quick reply. One follow up question:
Since I'll be listing my wife's CCs, will this effect her credit ? I was really trying to avoid that since her credit is fairly decent at the moment.

Thanks again,

- Xilix

Yes, it is going to effect her credit.

[OweTooMuch]

Yes, it is going to effect her credit.

Hi Frogger - I am in a similar situation. My husband and I are separated. Our credit cards are in our individual names only - no joint credit whatsoever - except that we live in a community property state of California. How does this impact the non filing spouses credit? I can't seem to get any answers on this anywhere. I am not listed as a user or a joint on any of his cards. Will his credit lines show IIB?

[IamOld]

xilix - I know this is easier said than done - but PLEASE don't worry about your wife's credit - worry about your own sanity and financial well being - well BOTH of your financial well being...don't throw good money after bad re credit cards!!!

[frogger]

Hi Frogger - I am in a similar situation. My husband and I are separated. Our credit cards are in our individual names only - no joint credit whatsoever - except that we live in a community property state of California. How does this impact the non filing spouses credit? I can't seem to get any answers on this anywhere. I am not listed as a user or a joint on any of his cards. Will his credit lines show IIB?

Go back up to post #2 from des and look at this statement:

"You live in a community property state. Your wife's credit card IS YOUR credit card if it was used anytime after you got married. It needs to be listed in your bk. "

That should explain the situation.

Then..... look at the post above this where the Old Man gave you these wonderful words of wisdom:

"xilix - I know this is easier said than done - but PLEASE don't worry about your wife's credit - worry about your own sanity and financial well being - well BOTH of your financial well being...don't throw good money after bad re credit cards!!! "

Good luck

[OweTooMuch]

Go back up to post #2 from des and look at this statement:

"You live in a community property state. Your wife's credit card IS YOUR credit card if it was used anytime after you got married. It needs to be listed in your bk. "

That should explain the situation.

Then..... look at the post above this where the Old Man gave you these wonderful words of wisdom:

"xilix - I know this is easier said than done - but PLEASE don't worry about your wife's credit - worry about your own sanity and financial well being - well BOTH of your financial well being...don't throw good money after bad re credit cards!!! "

Good luck

Thank you to Frogger and Despritfreya. The community property laws boggle my mind.