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Discharged but I have mixed emotions - Filed w/o my husband - Liens

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  • Discharged but I have mixed emotions - Filed w/o my husband - Liens

    Well after five long stressful years and just under $180,000 paid into the plan I have received my notification of discharge. A day that I thought would be such a celebration has been tainted by recently learning that filing independent of my spouse was not a good idea. I live in CA (community property state). Despite almost all of our debt being joint, I was advised by my attorney that my husband didn't need to file. One the stay was in place, and we were no longer constantly bombarded by creditors I naively thought all was well. What wasn't explained to me was that now that the discharge in place, is that collection efforts can be started against my husband once again. (I was in a non 100% plan.) I am just sick about this.

    What are our options? Does my husband need to file another 13, this time without me? Some of the creditors were paid less than 100%. Does the act of the trustee making these partial payments at the end of the 60 months re-activate the statute of limitations timeline on the debt?

    I can't get a clear answer from my attorney. Actually I haven't been able to speak to my attorney in years, I am only able to talk to his assistant (possibly she's a paralegal - I'm just not sure.)

    Liens:
    A credit card company had filed a lien against our home. My attorney successfully filed a motion to avoid lien. It was declared void and unenforceable. In an email that the attorney's office sent me yesterday, they adcised the following: "In order to finalize the process of removing the lien on your home, you must obtain a certified copy of the order extinguishing lien from the Court and have it filed into the chain of title for your home with the County Recorder’s Office in the county where your home is located." Is this necessary?

    We did pay a large amount to our HELOC. (Definitely was the largest amount paid in our plan.) We were unable to strip it because we owed less on our first TD than we did on the HELOC. All but approximate $16k was paid, but my plan did pay 100% of the agreed to payoff. The $16k was fees and interest accumulated AFTER the plan was confirmed. Throughout the BK we would receive letters from the lender advising it was not an attempt to collect a debt, but what the balance was each month. Once 100% of the confirmed amount was paid through the plan, we began receiving statements with an amount owed for the interest and fees. My attorney told us not to pay those. This all happened around the time that I discovered that filing alone while married was a bad idea. I assumed that my husband would be on the hook for that amount. Then yesterday we received a letter from the lender addressed to both of us advising that they were closing the HELOC account and that they would be mailing "loan satisfaction" documents to us or the county recorder according to state guidelines. They also advised that they'd be releasing the lien on the property within the legally required timeframe. This sounds to me like we have BOTH been forgiven of this note. Am I correct?

    I know this is long, but I am just so devastated about the bad legal advise that we were given and am dreading what comes next. These past 6 years have drained me emotionally and physically. I just can't stand the thought of this still going on.

  • #2
    First and foremost, Congratulations! Yes, a Chapter 13 is not a walk in the park and you have accomplished more than I think you realize.

    Originally posted by Jaded49 View Post
    What are our options? Does my husband need to file another 13, this time without me? Some of the creditors were paid less than 100%. Does the act of the trustee making these partial payments at the end of the 60 months re-activate the statute of limitations timeline on the debt?
    I really can't help you with community property and the "theoretical" community discharge. You'd have to speak with a bankruptcy attorney that understands how the community discharge "should" work.

    Originally posted by Jaded49 View Post
    A credit card company had filed a lien against our home. My attorney successfully filed a motion to avoid lien. It was declared void and unenforceable. In an email that the attorney's office sent me yesterday, they adcised the following: "In order to finalize the process of removing the lien on your home, you must obtain a certified copy of the order extinguishing lien from the Court and have it filed into the chain of title for your home with the County Recorder’s Office in the county where your home is located." Is this necessary?
    Yes. If there is a "recorded" lien, then the only way to have that lien avoided is to either have the original creditor file a satisfaction (in the public record) or to file a court order avoiding the lien. You need a certified copy to make sure the order is legitimate. This is quite common.

    Originally posted by Jaded49 View Post
    ...we received a letter from the lender addressed to both of us advising that they were closing the HELOC account and that they would be mailing "loan satisfaction" documents to us or the county recorder according to state guidelines. They also advised that they'd be releasing the lien on the property within the legally required timeframe. This sounds to me like we have BOTH been forgiven of this note. Am I correct?
    If they are going to record a satisfaction of mortgage (lien) in the public record, and send you loan satisfaction documents, then I would take it at face value. A loan satisfaction means that whomever is listed as a signer to the loaner has satisfied the loan.

    Originally posted by Jaded49 View Post
    I know this is long, but I am just so devastated about the bad legal advise that we were given and am dreading what comes next. These past 6 years have drained me emotionally and physically. I just can't stand the thought of this still going on.
    I wish I can give you more hep with the community discharge portion, but everything else appears to be working exactly the way it is supposed to happen. I really don't understand why you are super concerned at this point. When did you learn about how a community discharge works? If all property is jointly owned it is usually the suggested that only one spouse needs to file in those community property States.

    If you're super concerned with what may be conflicting information then you could pay some other bankruptcy attorney for a consultation on that topic (paying them for an hour).
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      Thank you so much LadyInTheRed for such a detailed answer. I think I always tend to expect the worst.

      I learned about how the community discharge works a month before making my 60th payment. I'm going to be looking for a differrnt attorney to get a 2nd opinion. Thank you!!

      Comment


      • #4
        I suggested the (paid) consultation because it appears that you're not getting true "legal" representation if you're not speaking with an attorney. I would have hoped that your original attorney explained the community discharge prior to you filing! That would have been the best time to explain how it works and what it doesn't do.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment


        • #5
          Originally posted by Jaded49 View Post
          Thank you so much LadyInTheRed for such a detailed answer. I think I always tend to expect the worst.

          I learned about how the community discharge works a month before making my 60th payment. I'm going to be looking for a differrnt attorney to get a 2nd opinion. Thank you!!
          I think you mean to thank justbroke. But, since I've already been thanked, I will try to help with the community property question.

          A creditor can try to collect from your husband and sue him. But, if they get a judgment, they cannot collect against community property or your separate property. They can only get his separate property. If your husband does not have any separate property, then he can try telling the creditors that he has no separate property, and that your community property is protected by your discharge. The fact that he has no separate property may help him negotiate a settlement to avoid a judgment. If your marriage is terminated, all of his assets will be collectable, even if they used to be separate property.
          LadyInTheRed is in the black!
          Filed Chap 13 April 2010. Discharged May 2015.
          $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

          Comment


          • #6
            Well, it's been 5 days since my discharge and I am already seeing one collection charge on my husband's credit report. (Ironically filed several days prior to the actual discharge day.) He also got hit with a "more than 120 days late" on our HELOC. (Our HELOC was paid through the plan. We received a letter from the lender addressed to both of us advising that they were closing the HELOC account and that they would be mailing "loan satisfaction" documents and releasing the lien on the property within the legally required timeframe.)

            I did find a letter template online that I will be using. I'm not sure if it will work, but it's worth a shot:

            On (Date of Bankruptcy Case Filing and Filing Spouse's Name) filed for Chapter 13 Bankruptcy in California (Case No.). (Filing spouse's name) received a Chapter 13 bankruptcy discharge on (date of discharge). As you are aware the discharge prohibits any attempt to collect from the debtor a debt that has been discharged. In a case involving community property: There are also special rules that protect certain community property owned by the debtor's spouse, even if that spouse did not file a bankruptcy case. At the time of filing (Filing spouse's name), was married to (Non-filing spouse's name). The bankruptcy case for (Filing spouse's name) listed all community assets as part of the bankruptcy estate. In this case the discharge operated as a community discharge where community claims were discharged for the non-filing spouse. Under Section 524 of the Bankruptcy Code, creditors of the debtor and the non-filing spouse who have a community claim on the date of the filing of the bankruptcy case are barred from asserting a claim against after acquired community property. The resulting Chapter 13 discharge operated as a community discharge of the community claim that (Name of creditor) held. Please be aware that an attempt to collect a discharged debt from the community property from the non-filing spouse violates the discharge and you may be required to pay damages and attorney's fees to the debtor.

            Filing separate was the biggest mistake!

            Comment


            • #7
              I'm sorry your lawyer didn't warn you of the consequences.

              The letter looks good to me. I think I would delete "after acquired" because I am pretty sure CP acquired before BK is also protected.
              LadyInTheRed is in the black!
              Filed Chap 13 April 2010. Discharged May 2015.
              $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

              Comment


              • #8
                Jade49, so sorry your going through this still. Your experience with your attorney sounds like mine, have not seen him in 5 years since filing and even then he had multiple folders in his arms as he made the rounds. But at least your discharged and I believe you made your last payment a couple of weeks prior to mine. I just received a copy of the Notice of Final Cure Mortgage Payment on the 12th of this month. So a few more weeks for me....Best wishes.
                California Chapter 13

                Comment

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