Ex is trying to get me to pay for defaulted car loan discharged in BK7

[tazunemono]

I had a car loan cosigned by my ex wife. Prior to my BK discharge, my divorce papers say that I'd remove her from the car loan. I tried to get the loan switched over into my name after our divorce, but CarMax wouldn't do it. I went ahead and did the BK7 filing, didn't reaffirm the car, and it was repossessed. Now, my ex is threatening legal action against me, saying I owe her for the car. I'm not sure what to do. Under the terms of my Federal BK7 discharge, I don't owe anything; however, under the terms of my divorce agreement, I do.

Help!

Does Federal law trump family court?

[despritfreya]

If you obtained a Chapter 7 discharge you did not discharge your obligation to protect your ex from the car loan. While you cannot be sued by the lender you can be halled back into DR court by your ex. You need to either settle with the lender to protect her or, to the extent she pays the lender, pay her for her loss. If you had a bk attny, he/she should have explained 11 USC 523(a)(15) to you.

Des.

[tazunemono]

I did my BK pro se, so I have no idea what 11 USC 523(a)(15) is

Mk BK was discharged in August, 2012

found this online..."unless the Spouse filed a lawsuit against the Debtor in Bankruptcy Court within sixty (60) days of the first date set for the meeting of creditors[6] and prevailed against the Debtor in the lawsuit, with the exception of §523(a)(5) debts, a Debtor’s obligations to his/her Spouse were discharged and the Spouse was forever barred from seeking collection of the debts from the Debtor."

[despritfreya]

found this online..."unless the Spouse filed a lawsuit against the Debtor in Bankruptcy Court within sixty (60) days of the first date set for the meeting of creditors[6] and prevailed against the Debtor in the lawsuit, with the exception of §523(a)(5) debts, a Debtor’s obligations to his/her Spouse were discharged and the Spouse was forever barred from seeking collection of the debts from the Debtor."

Can you post the link? Don't beleive everything you see on line. I am not aware of any time limit to file a complaint under 523(a)(15).

Edt to add: I missed that you were not aware of (a)(15). 523(a)(15) excepts from discharge all claims arising out of a separation agreement or divorce decree. Section (a)(5) that you reference above deals specifically with child and spousal support.

Des.

[IBroke]

Prior to my BK discharge, my divorce papers say that I'd remove her from the car loan. I tried to get the loan switched over into my name after our divorce, but CarMax wouldn't do it.

Did an attorney suggest that you get the loan switched? If so, what made him/her think that any lender would approve such a switch that would put the lender in a worse position?

[tazunemono]

She got the mortgage modified to remove my name on title and note. She wanted me to do the same on my car (which was in both of our names)

I would owe close to $10k on the car (balance after foreclosure sale)

She also wanted me to pay half of the $10k on a credit card.

Both of these debts were discharged in bankruptcy.

[tazunemono]

She didn't want to participate in my BK7. Timing was such that I was divorced prior to my BK7 filing and discharge. She refused to file BK because she said it's "morally wrong" and would rather repay 3-4x more than the debt is worth over the life of the loan. I don't see how that's my concern. I have tried to get her to file BK. She refuses. So now I'm stuck?

If that's the case, then I don't get the "fresh start" I was hoping for ... I guess I'm on the hook for repaying a $20k credit card loan, and a defaulted $20k car loan? I had to take the BK because I don't have enough money to pay these debts. Now I'm forced to pay them? What was the point of me filing BK?

I'm looking for options here, what's my next step?

I have to get her to see that filing BK is the best, cheapest, and least hassle of all options for her. Can I compel her to file BK if it's not in my best interest to repay the loans under the original terms (24% interest on the credit card, and Lord knows how much penalty & interest on the car loan) ... she'd have to get a judge to sign off on a new order to get me to pay, right? Would this be in family court, or BK court?

I'm thinking retain a lawyer to review my divorce decree to see if she has any standing to compel me to pay or hold me in contempt.

Realistically, even if she does file a motion against me, how much is it going to cost her? $175/billable hour adds up fast. Then, after a decision in her favor, she still has to get me to pay. I'm trying to get her to see that it's not worth it, because I have NO money. Even after BK, I'm barely scraping by. Any judgement against me would be basically non-enforceable because I can't pay. I'm paying my child support under a DSO but that's all I can afford. I've gotten that reduced twice already.

Thoughts?

[bcohen]

If you are "barely scraping by" as it is, and were even able to get your child support order reduced due to this fact, then I doubt you have anything to be afraid of. Even assuming that your ex-wife is able to sue and get a judgment, as long as you don't put your wages into a bank account, she won't be able to collect on said judgment.

In any case, in order to sue you for not paying the debts, she would have to prove that she suffered harm by your failure to pay them. In other words, she would basically have to first pay the money herself, and then sue you for reimbursement. Unless she is a really stupid and/or spiteful person, I don't see that happening.

[justbroke]

Can you post the link? Don't beleive everything you see on line. I am not aware of any time limit to file a complaint under 523(a)(15).

Edt to add: I missed that you were not aware of (a)(15). 523(a)(15) excepts from discharge all claims arising out of a separation agreement or divorce decree. Section (a)(5) that you reference above deals specifically with child and spousal support.

Des.

I agree wholeheartedly with Des and would like the reference. The person that posted the "complaint" requirement for 11 USC 523(a)(15) AND 523(a)(5) debts is certainly over-reaching.

Des is correct on the timeline. it's controlled by FRBP Rule 4007. Specifically "[a] complaint other than under §523(c) may be filed at any time. A case may be reopened without payment of an additional filing fee for the purpose of filing a complaint to obtain a determination under this rule."

It would be highly unlikely that this specific debt was subject to discharge or actually discharged. The ex-spouse could go back to the Bankruptcy court if they needed to, but I think it's moot. The debt is not discharged . Now you, as the debtor, could file a Dischargeability complaint to "determine dischargeability" should you want some sort of ruling.

The problem is that you cannot visit your choices upon her once there is already a judgment in the dissolution of marriage (a final decree). You owed $10K. You did in fact discharge it as to the (original) creditor, but not the already issued judgment in the divorce. You owe her $10K (period) for the car. (You owe her for any other debt that you agreed (or was ordered) to pay in the final dissolution.)

I'm no bankruptcy/divorce attorney, but I do not even think she needs to go the bankruptcy court. She could hold her ground in non-bankruptcy family court. Judges see this all the time. Unless you filed a Complaint to Determine Dischargeability under 11 USC 523 during the pendency of your bankruptcy and prevailed (had a judgment in your favor), the debt is not discharged as to the ex-spouse based on 11 USC 523(a)(15).

[jst4f]

Unless you specifically stated you owe her $10k from a divorce judgement (as well as the lender) in your BK and got it discharged, you owe it. I don't believe being a no-asset case would help in this case. Sorry

[justbroke]

Unless you specifically stated you owe her $10k from a divorce judgement (as well as the lender) in your BK and got it discharged, you owe it. I don't believe being a no-asset case would help in this case. Sorry

You can't even just schedule a judgment of the type in 11 USC 523(a)(15) (or (a)(5)) and have it discharged. You would need to file a complaint to determine dischargeability and have a judgment in your favor. This is an "exception" to discharge. It is not discharged automatically.

While it could come back to bite me someday, I actually like this particular exception. Otherwise, people would get a judgment in a final decree (in a dissolution of marriage), and then just head to the bankruptcy court to dissolve the judgment. Divorce judgments would be meaningless as to debt. This is one particular exception that I feel hits the mark perfectly. As for taxes... that's another story! (Many people do not get a fresh start because they exit bankruptcy, with their discharge, still owing (potentially) significant money to the IRS. But I digress.)

[bcohen]

The most important question here is not "is the debt discharged?" which we know it's not, but rather, "is there anything the ex can do to collect?" and that is what you should be focusing on.

I would assume that this type of debt is not considered "domestic support" in the sense of alimony or child support, but rather just an unsecured debt which cannot be discharged in bankruptcy, such as a private student loan. If that is correct, then even assuming your ex has (or obtains) a judgment ordering you to pay this debt, there may not be a whole lot she can do to collect!

If you are already being garnished to the max, and/or were able to successfully convince a judge to reduce said garnishment on hardship grounds, she won't be able to collect more by garnishing your wages. If you don't keep a bank account, and don't own any lienable property, than that judgment becomes just as worthless as the paper it's printed on.

In any case, you might as well wait and see what happens, but don't keep anything in the bank that you cannot afford to lose. It is possible that the finance company will see the bankruptcy discharge and write off the debt without bothering your ex. If that happens, you won't be asked to pay anything.

[justbroke]

I would never say that a judgment is worthless. If you are not a person who is in an "un-collectable" status, because you are either hiding money (keeping it out of banks), have too many garnishments already, or don't own any personal/real property, then a judgment is a real threat.

I agree that how this proceeds could depend on whether the lender proceeds against the other party to the debt. If the lender just gives up, then there is nothing to collect. However, if the ex-spouse has been paying down the debt, the ex-spouse is owed the money.

Too much to speculate about, really. One thing that we can all agree on is that it is not discharged. The affects of that upon your day-to-day life remains to be seen. Does your ex-spouse have remedies? Yes. Are those remedies enforceable? Yes. Are there things you could do to make collection "difficult"? Probably (see bchoen's response).

What should you do now? Maybe wait. I only say this because it appears the ex-spouse may already be affected by the repossession, otherwise there probably would be no threat of a contempt charge.

[Pjmax]

Definitely not an expert here, but if the ex obtained a judgement, is that judgement renewable, as in; if OP ever has any assets, the ex can collect?

[justbroke]

Definitely not an expert here, but if the ex obtained a judgement, is that judgement renewable, as in; if OP ever has any assets, the ex can collect?

It depends on the State in which the judgment is domesticated. Even if it's a 10 year non-renwable judgment, ten years is a long time!