March 14, 2007
Is Husband of a Disabled and Judgment Proof Wife Liable for Her Debts?
My wife has about $13,000 in debt from a credit card that she held before we were married (no joint use, etc.). She is now disabled and has not paid on this account for over 4 years. Creditors filed a civil suit just yesterday for repayment and legal fees of over 3k. Am I liable for this debt? What can she do to discharge the debt since she is disabled and will not earn an income? She is not a joint account holder on any family accounts (mortgage, other ccs, etc.) Thanks for your insight!
–S
Jonathan Ginsberg responds: S, thank you for your question. You are not responsible for your wife's debt - period. If she does not work and has no assets titled in her name, I would say that she is "judgment proof." The creditor can get a judgment, but there are no assets or wages to go after.
The potential issue - if she has a judgment against her, that judgment would attach to any property that she might acquire in the future. Similarly, if she ever did go back to work, her wages would be subject to garnishment (although the creditor does not get notified automatically - they would have to find out about any work).
Her option now would be to look at bankruptcy. Realize, however, that the Bankruptcy Code requires you to reveal household income - it is possible that your income could have a bearing on whether your wife could file a Chapter 7 to wipe out this debt.
This threshhold question about household income has made consumer bankruptcy a much more difficult area of practice. Before I would be able to give you any advice about your possible bankruptcy options, I would have to review and analyze income records from the past year for you, your wife and any other member of your household.
With regard to the $3,000 in added fees - that would make me suspicious. Often times creditors and their collection agencies or lawyers add fees far beyond what is provided for in the original credit card contract. Many potential bankruptcy clients I see also have viable claims under the Fair Debt Collection Practices Act or the Fair Credit Reporting Act. Just because a fee is included in a lawsuit it does not mean that the fee is legal or accurate.
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Filed under Consumer protection, Means Test issues, Median income test issues by Jonathan
Comments on Is Husband of a Disabled and Judgment Proof Wife Liable for Her Debts? »
WHAT IF YOU HAVE A PREVIOS JUDGEMENT ON A CLIENT AND THEY FILE BANKRUPTCY IS THAT JUDGEMENT STILL GOOD OR CAN THEY CLAIM IT IN THERE BANKRUPTCY.
THNAKS
RUBY
If the judgment was obtained prior to the bankruptcy, the debtor can include it in his bankruptcy. A bankruptcy discharge would serve to eliminate the debtor's personal liability; however, the lien against the debtor's property would, arguably, remain. This is why debtors file Motions to Avoid Judgment Liens - to get rid of the lien against property (in rem jurisdiction for all you legal types).
Jonathan
my husband has a judgement on a credit card that i never used can they come in my home and take my belongins anmy childrens belongings even though i want named on th judgement
I wonder if you might give me some insight on this please? I live in the State of Texas. Am permenantly disabled now. Am single, with only income monthly being my Social Security Disability check; only assets being my 2001 vehicle. I was served papers yesterday on a Capital One credit card (which it shows they "charged off" in 2005 on my credit report) saying if I don't respond to the JP's Court office by March 17th, the attorney representing Capital One can "then get a judgement against me". This was originally for a $2500 debt, which is now up to $4800 w/interest having been tacked on since 2003. My question is, I suppose, am I considered "judgement proof" at this point? Who determines that one is actually judgement proof? I am unsure where to go from here. I have no money to pay them, have told the numerous collections people that call her that many times.
Thanks
Kim
Where does one acquire the info on "JUDGEMENT PROOF" ? My residence is Ma. I believe I am elligable. Any help you could offer would be greatly appreciated. Thankyou, Ms.Dakin
The term "judgment proof" is not a legal status. I use this term to refer to a situation where a creditor has no realistic basis to collect on its judgment. In situations where someone is judgment proof I use a series of letters and FDCPA notifications to get the phone calls stopped.
At the end of the day, however, if the creditor wants to get its judgment and keep it active, then you will constantly have to be on guard against acquiring assets that might be liquidated to pay the judgment.
This is in response to Erin's question from March 4, 2008. If you were not named on the lawsuit, the judgment against your husband cannot be enforced against you.
However, if the judgment creditor can find assets in your hunsband's name (like joint bank accounts or jointly titled property) you may have an uphill battle trying to get your money or property back if the judgment creditor seizes it.
I am also interested in this "judgement proof" theory. My wife is in a situation almost EXACTLY like Kim's from 03/06/08. She owns no assets except her vehicle, which I paid for then transferred to her for insurance reasons. She is on permenant disability, and her only income is her disability check. She has bank accounts, but they have virtually no funds. She received an information subpeona and is worried that a levy could be put on her car. Should she be concerned?
However, we do have a friend who owed a significant amount of debt. The sheriff actually came to his home to seize property, but didn't. He said he usually only seizes things of significant value. Anything less isn't worth it. Is this true?
We are in NJ by the way.
If my husband signed off on the civil lawsuit papers that stated he can't claim in bankruptcy and now is unemployed and disabled, can he still file a ch. 7? We have no joint assets.
I'm not sure that your ex-husband can waive his right to file bankruptcy. However, if he did, you could certainly argue that he explicitly agreed that a civil judgment creditor's debt would be non-dischargeable.
You could also argue that his agreement to pay this debt is in the nature of a marital debt that is not dischargeable.
I would recommend that you speak with a bankruptcy lawyer in your jurisdiction for some guidance as to how the bankruptcy court and the state court would treat your husband's agreement not to file.
Is there any precedent for stopping a bankruptcy discharge because you have an unpaid judgment?
My friend has about $8,000 in debts and co signed for a very expensive home. He pays his own mortgage but now the home he co signed for is in foreclosure. Last month he started collecting Social Security benifits plus he has a small pension and no savings. Will he be held responsible for these debts being they were acquired prior to SSI or he will be excused since he is on SSI now?
Jake, your friend being on Social Security does not excuse him from legal responsibility for his debts. Social Security benefits are exempt from garnishment (with a couple of exceptions) so any credit card lender or the mortgage company cannot seize his Social Security check. His pension may or may not be exempt from garnishment - you would need to look at state law on this issue. Congress decided to protect Social Security money, I suppose, because recipients often have no other source of money. However, no one should look at this protection as a justification for intentionally defrauding creditors.
I feel the same way Jonathan, but this guy just seems to luck out time after time and we the consumer will be the ones who will end up paying. If the large mortgage that he signed for (he was the mortgage holder not a co-signer) was not truthfull on the application would that change things? The son in law was the motgage broker, he is the one who is living in the home that is now in default. I feel that it was fraud but that's only my opinion and if it is I feel that his Social Security benifits should not be protected.