Husband stopped paying on motorhome, now bank wants to come after me

[msally1947]

I had a 5 years chapter 13 that was discharged in November 2013. Husband didn't file with me. I did not include the motorhome in the ch. 13, as my husband said he would continue making the payment. Oh, and I am a co-debtor on the motorhome. Jump forward to January 2016, my husband filed his own 5 year chapter 13. The motorhome was not included in his ch 13, per advice from his attorney. But my husband had stopped making the payments months ago. We waited for them to come take it.....nothing. Today we got a "motion for relief from stay and relief from stay to pursue co-debtor xxxxxx(me). His attorney says the bank wants to come after ME for the money!! I am retired and on social security, no other income. I have a very small amount of a 401k from where I worked (less than $8,000). The document says we owe $15,578.00 and the NADA book value is $8,000. My questions are: can the bank garnish my 401k or my social security income and will the bank sue me? If so, sue me for what? I am a nervous wreck over this, I put in my 'time' on my own bankruptcy. Is this ever over? Thanks!!

[LadyInTheRed]

What do you mean that you did not include the motorhome in your BKs? All debt is included in BK. The question with secured debt is whether it is paid by the trustee using your plan payment or whether you make payments directly to the lender or surrender the collateral. Was the debt listed on your petition and did the creditor get notice? Did you indicate on your statement of intentions filed with the petition that you intended to surrender the motorhome? If so, then your personal liability for the debt would have been discharged if you did not reaffirm the debt.

It sounds like your husband stated that he would surrender the motorhome and that his liability was discharged. You need to contact your BK attorney or review your petition and other documents filed in your BK to determine whether your liability for the debt was discharged in your BK.

[LadyInTheRed]

And to answer your questions....

My questions are: can the bank garnish my 401k or my social security income and will the bank sue me? If so, sue me for what?

The bank first has to get a judgment before collecting against any of your income or assets. The bank would first repossess the motorhome, sell it and then sue you for the deficiency, if they decide it is worth suing. They may also sell the debt leaving the buyer to try to collect or sue.

Social Security Income is protected from collection by a judgment creditor, but depending on the circumstances, if a creditor finds and freezes and account containing social security income, you may have to prove that the account contains social security benefits to unfreeze it. The 401k is protected from collection, at least before it is paid to you. The federal law on weather funds paid to you from your 401k can be taken once they are sitting in a bank account is apparently unsettled. Here is an article on that: http://www.nolo.com/legal-encycloped...-accounts.html

As stated in the article, if the funds are not protected by federal law, they may be protected by your state's exemption laws.

If a creditor cannot take either your social security or 401k, they may still sue you and place a lien on your home if you have one or try to take your cars or any other assets you may have now or in the future. What they can and cannot take will depend on your state's collection exemptions.

[msally1947]

Thank you for the information LadyInTheRed! For my Ch 13, I did not indicate that I would surrender the motorhome. We said we would make the payments directly to the lender. For my husbands Ch 13, he said he would surrender it.
My 401k has never been transferred into a savings or checking account. I retired last year, and I just left the 401k (was through work) where it is. I haven't touched it, taken anything out, or added to it. I planned on seeing a financial planner to get advice on how to handle it, now that I am retired, but I have never gotten around to it. Our home is in my husbands name only. Both cars are in his name. So it sounds like they would have difficulty getting anything from me (I hope). My mom passed away in January. Her estate is going through probate as we speak. Can they take anything I might get from her? It wouldn't be much! She was not a wealthy lady.

[LadyInTheRed]

Unless your can exempt the inheritance from your mother under your state's exemption laws, a judgment creditor can go after the assets after you have received them. Depending on state law, a judgment creditor may be able to intercept the assets before they are distributed from probate.

As for your 401k, the creditor could get a judgment and then wait until you receive a distribution and go after it to whatever extent allowed. If you are 70 1/2 or older, do you know that you must take required minimum distributions from your 401k?

[msally1947]

I did not know about the required minimum distributions!! I am 69. I better put this on my calendar. Thanks again for all the info!