Chapter 13, Divorce and Joint Debt

[Vandervecken]

Good morning! I have (what I hope) are simple questions, but being a legal holiday I can't ask anybody else .

My wife and I are divorcing, there are only two joint unsecured credit cards. Both are VISA cards through Wells-Fargo we used to replace the central air systems in our house (two floors, two separate units, replaced a year apart.) My ex kept the house and in the divorce agreement is assuming responsibility for the two credit cards. But I know she doesn't make enough money to make the payments for long, and eventually she'll stop making payments.

I am filing a chapter 13 shortly; in the plan I would like to make sure these two credit cards are discharged. Is it possible to list them as debts to be discharged, but also not pay anything on them in the plan since the divorce agreement stipulates she will pay them?

And I guess the same question applies to the home mortgage: can I use the chapter 13 to insulate myself from her future foreclosure?

Thanks!

[justbroke]

Yes, you would include these in your Chapter 13 schedules. The debt will be discharged. The final decree for the marriage, specifying any property settlement or who will pay for debt, will still be enforceable.

As for not paying for them in the Plan, it shouldn't matter unless you are in a 100% plan. One strategy could be to list them on the schedules and should they file any claim you can object to the claim. If you're not in a 100% plan, why would it matter how the Trustee spends the "disposable monthly income" (DMI)? That's the real question and I don't think it matters in a non-100% plan. Just my thoughts.

The Chapter 13 would discharge the mortgage as well, but you may still be a party to any foreclosure lawsuit because [the mortgage holder] would not know if you had any "claim" to the property. The Chapter 13 would certainly discharge the mortgage with respect to your personal liability for paying the mortgage and any other claim arising from that claim. I would be more worried about the title of the property for general liability concerns -- just my personal view. Did you file a quit claim? Is your name still listed on the Deed?

Please understand these are just my thoughts and you really need to make sure your bankruptcy attorney is aware of your divorce and that you give them a copy of your final decree and any property settlement agreement.

[Vandervecken]

As for not paying for them in the Plan, it shouldn't matter unless you are in a 100% plan. One strategy could be to list them on the schedules and should they file any claim you can object to the claim. If you're not in a 100% plan, why would it matter how the Trustee spends the "disposable monthly income" (DMI)? That's the real question and I don't think it matters in a non-100% plan. Just my thoughts.

To be honest, my reason for not wanting to pay anything is that the credit cards are "her" debt under the terms of the settlement. I'm not getting the benefit of the air conditioners, and I don't want my chapter 13 to help her pay off part of her debt.

I know, I'm being petty ;) . But she caused all this and her reckless spending is going to cause me 5 years of hardship at age 52.

As far as the mortgage and title, I haven't signed a quitclaim yet. The terms are that I will when (if) she refinances the mortgage under her name alone. But I see your point and I'll reinforce it with my attorney.

Thanks!

[despritfreya]

To be honest, my reason for not wanting to pay anything is that the credit cards are "her" debt under the terms of the settlement. I'm not getting the benefit of the air conditioners, and I don't want my chapter 13 to help her pay off part of her debt.

Your divorce decree has no impact on the creditor. It is a contract between you and your ex. If you are liable on the credit cards they MUST be included in your bk. If the creditor files a claim it will share in the pie for unsecured creditors as such is its right.

As to the home, since you are on the title you must list it on Schedule A with a notation that the divorce decree gave it to her. If you quit claim the property to your ex before you file the transfer is listed on question 10 of the Statement of Financial Affairs. Regardless of ownership of the home, you MUST include the mortgage company as a creditor if you are on the loan and the loan has not been paid off by the time you file.

Des.

[justbroke]

Des explains the process better than I did. I would not worry about if the unsecured creditors receive some distribution under the Plan.

[Vandervecken]

Thanks, everybody... the credit card issue will get "interesting"...

[LadyInTheRed]

It's actually shouldn't get interesting at all in the context of your bankruptcy. Your divorce decree did not erase your liability to the creditors. If the creditors file claims in your Chap 13, they will get paid in proportion to all the approved unsecured claims. When you complete your plan, you will be discharged of your liability to pay those debts and the creditors can never go after you again for the debts. If your wife doesn't keep them current after your BK is discharged, they can go after her.

What is slightly more interesting is whether your wife would have to reimburse you for anything that gets paid on those credit cards during your BK. If the divorce settlement is not final, you may be able to include such a requirement. You can ask your divorce attorney about that. If it were me, I wouldn't worry about it. I'd rather move on with my life than trying to stick it to my ex by getting every penny I can.

[Vandervecken]

What is slightly more interesting is whether your wife would have to reimburse you for anything that gets paid on those credit cards during your BK. If the divorce settlement is not final, you may be able to include such a requirement.

The settlement is not final, but has the wording "Defendant (her) shall make all payments and shall warrant Plaintiff against any liability." I suspect that I would have the ability to go after her.

But the settlement has the same wording on a rental house we purchased. My money, my labor, but Arkansas law required her name to be on the title. I'm keeping it, but it's upside down and cannot be refinanced. If I turn it over to the trustee for auction, my ex may come back on me for any shortage. To solve this problem, I might turn this house into my primary residence after the divorce is final. The mortgage payment is actually a fraction less than apartment rent and the neighborhood is decent for an older man like me.

If it were me, I wouldn't worry about it. I'd rather move on with my life than trying to stick it to my ex by getting every penny I can.

You're right of course, but there's no such thing as a "civil" divorce, especially when one spouse maliciously abused the other. It;'s very hard to hold down the desire to hurt back.