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Attorney Fees, Fraud and Foreclosure... Can He Discharge Them?

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  • Attorney Fees, Fraud and Foreclosure... Can He Discharge Them?

    I left my ex almost two years ago. I left him the house, among other things, and he was ordered to make the mortgage payments and that I be "indemnified and held harmless" for the payments. The decree was filed in the first part of August 2010. Unfortunately, due to poor counsel, my name remained on the note.

    I quickly learned that he stopped paying on the house and has not made a payment from July 2010 to the present (last payment was for June 2010). The house went into foreclosure in November 2010 and both of us were served in December. Although he told me he was trying to work something out with the mortgage company, the mortgage company filed a motion for summary judgement last month (April 2011).

    I have sued him for contempt of the divorce decree and have accumulated over $4,000 in attorney fees for the contempt charge, a motion to modify he filed, and the foreclosure action. Through the discovery process related to the contempt filing, I learned that he has made approximately $49,000 between 6/25/2010 and 11/25/2010. The home, which has a monthly mortgage payment of roughly $1,100, went into foreclosure late November.

    Also in November, he was "laid off" from his parents' company and has been collecting unemployment since.

    My concerns are that now he will file for bankruptcy and any attorney fees I have paid for his contempt and answering the foreclosure action will not be reimbursed. I was wondering if him entering into the divorce decree where he was supposed to indemnify and hold harmless would be considered fraud since the decree was filed early August and his last payment was at the beginning of June for June's payment, especially since the discovery shows him having sufficient income to cover the mortgage payment.

    Also, how will the court react to him making many high dollar purchases in the month immediately prior to his no longer making payments on the house (motorcycle and truck)?

    Another issue is that he's working doing trade shows where he rents a booth and sells items dealing in all cash. This is done in addition to his unemployment benefits. He hasn't disclosed what he makes. Would a BK trustee take that into consideration? How would it be proven, outside of pictures showing the booth... and his Facebook page showing the dated picture with his caption, "Check out my booth!" (Seriously!)

    Finally, should I file bankruptcy? I mentioned the mortgage that my name's still on, but there's two other items that he quit making payments on with my name attached. My credit is shot, and my income to credit ratio won't even let me qualify for a auto loan for a used car! Before all of this, my credit was perfect. Revenge is his I suppose... but at least I don't have to look at him anymore, so the rest I can deal with.

    Any help is appreciated!

  • #2
    Wow, more bad blood story.
    Just my opinion. If you keep fighting with him, won't do you any good AT ALL. Just create more bad blood between you 2. How about just let him get out of the mess through bk and you just do the same.


    • #3
      Domestic support and divorce degrees, if ordered by the court are not affected by BK. Yes the Bank can come after you for the debt, you are on the note and unless he could have refinanced , unlikely in this market, you would remain on the note. However as you have done you can go after him for the damages he has caused you. His BK if everything was done properly in divorce court, which it sounds like it was, will not stop you from enforcing your rights against him.

      However if you have other issues, debts, whatever, then doing BK yourself would wipe it out and you would be done, however I THINK you will be fine with your court actions against him. However the bank will still rake you over the coals, they don't care about your divorce. Just make sure you collect the damages from him.
      3/2/09- Filed: chapter 7 / No asset
      4/1/09- 341 Hearing: 1 creditor showed up Got to love family feuds
      4/2/09- Trustee Report of No Distribution Filed
      6/24/09- Discharged and case closed


      • #4
        First, your comment of "unfortunately, due to poor counsel, my name remained on the note" has no basis in reality. You are still on the note because your ex husband was unable, in this economy, to refinance the property. Your name remains on any debt until the debt is paid in full and you remain liable on any joint debt regardless of what your divorce decree states.

        Second, if your ex is smart and is considering a bk, he will file a Chapter 13 since property settlements ARE dischargeable in Chapter 13's. The only debt that arises out of a divorce decree that is not dischargeable in a 13 is an obligation that is "in the nature of support".

        Third, if he files a bk you better get yourself a good attorney if you are going to continue down the litigation path. The Bk court is not a divorce court and if you try to fight his bk on your own you will look like nothing more than a vindictive ex and will lose the Judge the moment you step foot in the courtroom.

        As to you filing bk, you should consult with a bk attorney as such may be in the cards.

        Sorry to sound curt but I see these issues every day. Vindictive ex-spouses remaining vindictive. Life is too short. Move on.



        • #5
          Forget about it and do whatever is best for you. If bk is best for you, do it, if not don't. Don't worry about him, it won't benefit you.


          • #6
            Originally posted by despritfreya View Post
            First, your comment of "unfortunately, due to poor counsel, my name remained on the note" has no basis in reality. You are still on the note because your ex husband was unable, in this economy, to refinance the property. Des.
            How do you know he even tried? You're assuming. And her venue would not be BK court, but Family Court. Where he is in contempt. If her attorney was smart, there is a clause in there that says all aspects of the court order is considered support.


            • #7
              Originally posted by helpmeout View Post
              How do you know he even tried? You're assuming. .
              Very true, but "poor counsel" still would not be the reason she is on the loan. Can't tell you the number of times disgruntled ex's come in and complain "the decree said he had to get me off the loan". My comment is usually, “sure and go back to state court to make him try. . . see what happens. There is no equity in the property and he probably won't qualify for a re-fi, but feel free to try".

              Originally posted by helpmeout View Post
              And her venue would not be BK court, but Family Court. Where he is in contempt. If her attorney was smart, there is a clause in there that says all aspects of the court order is considered support.
              Here is where you are mistaken. Regardless of what the decree states, a bk judge has the independent authority to determine if the obligation is "in the nature of support". If the decree says one or the other but the bk judge determines its in "the nature of support" then it is non-dischargeable and visa versa. Clearly him keeping the home and paying the mortgage is not in the nature of support. Now if she was keeping the home and he had to pay the mortgage. . . well you get the picture.

              I have seen too many of these types of "plays". The vindictive ex rarely comes out ahead and in many instances, has to deal with their own contempt issues in the bk court due to their short-sightedness on how to properly conduct themselves.



              • #8
                IF he bk's, she could AP and with proper and business like action, reaffirm the divorce decree with the back mortgage payment and equivalent support for future housing as he seems to have violated the divorce decree by not keeping the existing payments up to date.

                We were APed for a suit never taken to Court. My enemy wished a five year old suit to be tried in four hours by a Judge way out of venue. We fortunately got the AP with stipulations to have the Suit thrown back into Civil where it belonged. Nothing came of either and since I'm "sad" to say, the jerk died. Karma is a b*tch. 'Hub
                If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.


                • #9
                  Originally posted by despritfreya View Post
                  First, your comment of "unfortunately, due to poor counsel, my name remained on the note" has no basis in reality. You are still on the note because your ex husband was unable, in this economy, to refinance the property. Your name remains on any debt until the debt is paid in full and you remain liable on any joint debt regardless of what your divorce decree states.
                  1) He never attempted to refinance. He took the ostrich approach. It wasn't until the foreclosure was served on him that he even spoke to the mortgage company.
                  2) My attorney said I would be fine by quitclaiming the deed to him with my name still on the note. I was led to believe that the decree would protect me. I was naive and relied on counsel. So yes, it was very poor counsel to the tune of a publicly sanctioned bar complaint. That is the reality of it.

                  Look folks, some of you all seem a tad bitter, and that's fine. Every situation is unique, so a blanket "I've seen this before" attitude has already biased you and chances are your "advice" is not going to help me. That's all I'm here for... some guidance and help.

                  I've filed the contempt charges since he's in contempt. I'm responding to the foreclosure in case whatever comes of the contempt order puts me in a position to work with the mortgage company since he never did. I do want my attorney fees because I don't have $4,000+ to blow and I had to hire an attorney to protect my interests as a direct result of his actions and inactions. If I did nothing, I would lose all my options. I already tried the "cool ex" approach, and this is where it got me, so if me trying to protect my interests makes me vindictive, so be it.

                  Now, if anyone has heard of this as a viable option, I would love to hear some advice. What effect would a BK by him have on a contempt order should the judge rule that the house be deeded back to me for short sale? If this falls through, I will have to file BK to clear the three debts he's behind on, but will there be any issues I run into since I'm current on everything except those three and making relatively good money? Any bits of advice to prepare for BK if that's the route I have to go?


                  • #10
                    Lacerz: It is not that we are bitter but throughout the bk process we have seen many divorced occur during, before, and after bk, and they have never been "amiable". First, once you file bk, (or he) it will toll any suit in progress. Remember that. As I said above, read Adverse Procedure threads and stickies. Get the Nolo Press C7 book for about 21 bucks pdf download. It is worth every penny. Get a lawyer familiar with AP's as I wrote about above, as well as one that knows family law if possible. It is plain he is in contempt, but like a Judgment, nothing happens until you make noise about it, and you are. Good for you. Also welcome to the forum, and you will get help here. One of your advisers in this thread is a very good bk lawyer. His comments were of legal advice of his own experience, not pointed personally at you.

                    Remember, if we all had the right answers would we be here? See my sig. BUT we do now have various experiences and learned much in the school of hard knocks. 'Hub

                    EDIT: BTW an Adverse Procedure is a suit that the bk DOES NOT stop. It is a separate suit but tied to the discharability of a debt.
                    Last edited by AngelinaCatHub; 05-04-2011, 07:20 AM. Reason: add on
                    If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.


                    • #11
                      I apologize. It's just a bit frustrating when I took a majority of the unsecured debt and left him with secured debt, such as the house, and I took care of my portion and he simply stopped paying... especially when his yearly salary was just shy of six figures. I made a fraction of that at the time and still took on a massive amount of the marital debt because I just wanted to leave and he wanted to put all that on me. Well I took it, attacked it, and now it's gone, but I still get screwed.

                      Anyway, my new counsel is AV rated and very thorough, but he doesn't do personal BKs. His areas of practice are family law and corporate law, including corporate BKs. He keeps telling me to see this through and hold off on filing for BK, so that's what I'm doing, but I don't see this ever ending if my name is stuck on those notes. My credit's already shot now, so I'm wondering why I shouldn't just file. At least then I would get a definitive start fresh point. As it is, he could work something out, then default five years down the road and I'm back to square one.


                      • #12
                        Hi Lacerz...

                        What an utterly crappy position your ex has put you in financially. Blergh.

                        If you are able to do so, I would consider filing a BK without worrying about what your ex does. If your credit is shot already due to his failure to follow your divorce decree why not get rid of the stress this is putting you under? This is the one absolute way I know of that will fully relieve your financial responsibility to your old mortgage.

                        This is a really out-there question for any of the experts: Would the Trustee help the OP to obtain her settlement from her contempt suit (via an AP) in the hopes that he may recoup it for the BK estate?

                        I would also do screen captures of the ex's Facebook page now and put them away in case you need them later.

                        I wish you good luck!
                        ~~ Filed Over Median Income Chapter 7: 12/17/2010 ~~ 341 Held: 1/12/2011 ~~ Discharged: 03/16/2011 ~~
                        Not an attorney - just an opinionated woman.


                        • #13
                          Unfortunately, I'm going to agree with the consensus here, your suit will likely go nowhere but will make the current attorney handling it rich with attorney fees. If your credit is already shot, you may as well file bankruptcy now, get yourself out of responsibility for this loan and anything else you have outstanding.

                          This situation is very common, refinancing these days is almost unheard of in these situations and I meet with many spouses in your exact situation. Go in and meet with a qualified personal bankruptcy attorney and see what they say about your situation. No need to drag out your poor credit for any longer than necessary, start rebuilding it now.
                          Any information posted by me is for general informational purposes only. While I am an attorney, I am not YOUR attorney and any information I provide is not legal advice.


                          • #14
                            Thanks for all the input! I don't know why I have such a stigma about filing BK. I went ahead and set up an appointment to meet with a BK attorney. Might as well get this ball rolling...


                            • #15
                              Just remember this is a business decision, however I agree with the others that have posted. Might as well get the ball rolling in the right direction to move past this mess and be done with the ex and any financial ties to him.
                              8-07-09-filed Chapter 7

                              Life is not what challenges you face, but how you face those challenges.


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