Help! Community automatic stay not working.

[bcohen]

I am married, living in Arizona, which is a community property state. I filed for Chapter 7 bankruptcy last month in my name alone, due to the fact that all of the debts (with the exception of a $600 doctor's bill in my wife's name) were incurred by me alone, before the marriage took place. I was advised, both by attorneys, and by internet forums such as this one, that I could include the medical bill in my bankruptcy identify it as a community debt, and the automatic stay would supposedly protect us both, jointly as a couple.

However, that does not seem to be working. My wife received a series of letters from the medical office warning that the debt would be sent to collections, and now NCO Financial is robo-dialing our phone. I thought that the fact this debt was included in my BK schedules and mailing matrix would deter such collection activity, but it has not. The bankruptcy was filed more than a month ago, so they should have received their official court notice by now.

[despritfreya]

Bc, unfortunately your bk does not stop a creditor from attempting to collect from the non-filing spouse. What it does do is prevent the creditor from collecting against "community" assets. What does this mean????

A creditor can sue your spouse due to her sole and separate liability and get a judgment however, so long as you remain married to her and she does not have separate property (inheritance is an example), the creditor cannot collect. This means that the judgment would be worthless unless there are separate assets.

Now, can you bluff your way to stopping collections. Does not hurt to try. Contact the creditor and tell it that your wife is protected due to the fact that the debt is "community" in nature and that any further attempt to contact her will be met with a request for sanctions. It is a bluff but my guess is that it will work.

Des.

[Pizza]

There were some older posts on the board that alluded to the 'phantom discharge' or 'hypothetical discharge' of community debts in community property states, but honestly that is dubious. TX being a community property state, I tried to bring this up at consultations and got some confused looks, but no dice. So I just put off filing (my wife was initially unwilling to file with me). Eventually, she got on board and we filed together. It may not be possible to do what you're trying to do in some community property states.

[justbroke]

That is why it's a hypothetical discharge. So long as there is only community property, the discharge is like a hungry ghost... devouring would-be creditors trying to collect against community property. However, as Des clearly demonstrates, once the community is dissolved or there is non-community property owned by the non-debtor spouse... the phantom discharge can not protect the non-debtor spouse. The purpose of this is to protect community property against community debt. In this particular case, it is a non-debtor spouse's specific debt and this could be problematic.

[bcohen]

So what is my best course of action here? Should I add NCO Financial to my creditors list? Should I send them a cease-and-desist letter? I am not worried about being sued for this debt; I just don't want to be bothered with collection calls.

[despritfreya]

Call NCO, give it the bk info. Remind it that this is a community bk and a community debt. If the original creditor is listed I see no need to amend Schedule F but it never hurts. Court charges $30.00 and you must mail a copy of the amendment and the 341 Notice to NCO,

Des.