How will bankruptcy affect our assets? 25 Answers as of January 21, 2013

In 2007, my husband and his mother purchased a car together. In 2009, his mother filed for bankruptcy. Now, Debt collectors are calling for payment? What should he do? How will this affect our assets as a married couple? Thanks!

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Joseph Lehn, Esq
Joseph Lehn, Esq | Lehn Law, PA
If your mother-in-law discharged the debt in her bankruptcy petition, as a co-debtor, your husband is now liable for the entirety of the debt. He may consider that if he or she wants to keep the car he can continue making the monthly payments. If they are or have surrendered the car, he will be liable for the deficiency. He may wish to reach a settlement with them or file bankruptcy himself to discharge that debt.
Answer Applies to: Florida
Replied: 8/22/2011
Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
The automatic stay does not apply to him, they will look to collect from him.
Answer Applies to: Washington
Replied: 8/10/2011
Bankruptcy Law office of Bill Rubendall
Bankruptcy Law office of Bill Rubendall | William M. Rubendall
When there is a co-signer the non-filing person is liable for the debt.
Answer Applies to: California
Replied: 8/5/2011
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
If he co-signed, he is liable for the payment. He shoudl either pay the bill and work something out with the creditor or research other alternatives, such as bankruptcy. Assets of the marriage are protected by state law and that varies greatly from state to state so it would be wise for you to seek counsel from a local attorney for guidance.
Answer Applies to: Indiana
Replied: 8/5/2011
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
As a co-signer, your husband is liable for the debt. This means that they can take all appropriate collection action which may effect your assets.
Answer Applies to: New Hampshire
Replied: 8/5/2011
    Law Office of John C. Farrell, Jr.
    Law Office of John C. Farrell, Jr. | John C. Farrell, Jr.
    Find out if the auto was included in the bankruptcy. The loan on the car is a secured interest which means that collateral is behind the loan, in this case repossession. The payments should have continued on this loan or a voluntary relinquishment. Your husband is part owner of the car despite his mothers situation. Typically, on delinquent auto loans, the car is repossessed and then sold at auction. Then the creditor will pursue an action for the delinquency which means the amount that is still owed even after the sale of the car at auction. At this point the debt becomes an unsecured debt and is pursued like another other debt i.e. credit card debt. . If your heart is not set on filing bankruptcy there is an aggressive alternative which is debt negotiation/settlement which can eliminate debt faster. In most cases people can reduce their debt and are out of debt in 2 to 4 years.
    Answer Applies to: Massachusetts
    Replied: 8/5/2011
    Theodore N. Stapleton, PC
    Theodore N. Stapleton, PC | Theodore N. Stapleton
    She discharged her obligation but your husband still owes on the car. I am happy to discuss your options with you.
    Answer Applies to: Georgia
    Replied: 8/5/2011
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    Because he was co-owner on the car and presumably his mom went bankrupt on it, the creditors are going to come after him to pay all of it. They can't go after his mother if she discharged the debt. He should call and see if they will settle for a lesser amount or set up payments. If he does neither it can result in his wages or your joint accounts being garnished. Good luck!
    Answer Applies to: Michigan
    Replied: 8/5/2011
    Lake Forest Bankruptcy
    Lake Forest Bankruptcy | Anerio V. Altman, Esq.
    The collectors can sue your husband and come after your combined assets. Either you settle with them or prepare to deal with an eventual lawsuit. You don't necessarily have to pay the full amount of the debt, you can settle for less, but your husband is very likely to get sued, and your family assets could be affected.
    Answer Applies to: California
    Replied: 8/5/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    He should either pay for the car, since he signed for it.along with her,or file bankruptcy. A good lawyer can help you (him?) figure out how to keep your assets, depending on what you have.
    Answer Applies to: Virginia
    Replied: 8/5/2011
    Colorado Legal Solutions
    Colorado Legal Solutions | Stephen Harkess
    When you cosign for a debt and the other person quits making payments (like when they file for bankrutpcy) then the debt falls on you to pay. That is what has happened to your husband. If he does not make the payments, the creditor can sue him and obtain a judgment. With that, they can put liens on assets that he owns, garnish his wages or bank accounts, and take other actions to collect. This will affect you to the extent that anything you own also has his name on it.
    Answer Applies to: Colorado
    Replied: 8/5/2011
    Eric J. Benzer, Attorney at Law
    Eric J. Benzer, Attorney at Law | Eric Benzer
    Answer Applies to: Maryland
    Replied: 8/5/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    If mom did not pay for the car, the creditor is looking to him for payment. That is why lenders get co-signers, so they have a second person to collect from. This could result in a judgment against him. He might try to make a deal with them, (or if he has significant other debts a bankruptcy might be in his future). He should see a lawyer. I have no idea what your other assets are. O
    Answer Applies to: California
    Replied: 8/5/2011
    Law Office of L. Paul Zahn
    Law Office of L. Paul Zahn | Paul Zahn
    If he co-signed for the loan, then he is personally liable for it. He is left with two options: pay the loan or file for bankruptcy and discharge the debt. The creditors can file liens to get what is owed to them.
    Answer Applies to: California
    Replied: 8/5/2011
    Grasso Law Group
    Grasso Law Group | Charles Grasso, Esq.
    When your husband and his mother purchased the case together, both became liable for the debt. If the creditors don't think they can get payment from the mother they then look to collect from any others on the note. It is unclear from your question how the car was treated in the bankruptcy (surrendered, affirmed, etc.) so the answer is not specific.
    Answer Applies to: California
    Replied: 8/5/2011
    The Law Offices of Kristy Qiu
    The Law Offices of Kristy Qiu | Mengjun Qiu
    They have the right to call him because he remained liable as a co-debtor after your mother filed for bankruptcy (I'm assuming that they gave the car back to the dealer). It will depend on what kind of assets you have. Usually, if only one spouse is filing, all jointly owned assets that are NOT exempt are divided in half, and the half that belongs to your husband will be subject to liquidation (in chapter 7). Exempt assets in FL are: homestead (unlimited in value, up to 1/2 acre within any municipality, pretty much all of Miami, Fort Lauderdale and other cities, 60 acres outside of municipality), $1,000 in personal property (anything), $1,000 in car, and an additional $4,000 if you're not claiming homestead. If he's filing for a chapter 13, it's a lot more complicated, but the short answer is your assets won't be subject to liquidation. However, you might have to pay the value of his non-exempt assets over the period of 36 to 60 months. Chapter 13 is very complicated and I suggest you seek help of a lawyer.
    Answer Applies to: Florida
    Replied: 8/5/2011
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    Since your husband co-signed the loan with his mother he is equally liable for any default on the payment of the loan. The creditor can sue and obtain a judgment against your husband. From there, the judgment creditor will attempt to collect, including garnishing your husband's wages and seizing funds held in bank accounts. As long as his name is on the asset they are pursuing, regardless of whether yours is also on it, they will have the right to seize it. Your husband is entitled to various property exemptions under NRS 21.090. A detailed discussion of this situation is highly recommended to assure that the information provided in this statement accurately addresses your specific legal issues. I highly recommend a more detailed consultation with an attorney to fully advise you in this matter.
    Answer Applies to: Nevada
    Replied: 8/5/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Depends how much in assets you have. California provides many exemptions for your assets, but in order to know, need to know the value of your assets.
    Answer Applies to: California
    Replied: 8/5/2011
    Bird & VanDyke, Inc.
    Bird & VanDyke, Inc. | David VanDyke
    It sounds like what you are telling me is that your husband and his mother borrowed money on a car jointly. And that this loan did not get paid. If this is the case then they will make your husband pay the loan since his mother has filed bankruptcy. The creditor can levy on community assets to satisfy the debt.
    Answer Applies to: California
    Replied: 8/5/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    What assets do you have? Did they take the car back yet? Too little information to answer the question.
    Answer Applies to: California
    Replied: 8/5/2011
    Melinda Murphy Dionne, PC
    Melinda Murphy Dionne, PC | Melinda Murphy Dionne
    If your husband and his mother both signed the note for the car, your husband remains liable for any unpaid balance. I am assuming that your mother-in-law gave up the car in her bankruptcy case. Even if she kept the car, your husband remains liable on the debt until it is paid in full. His liability should have no impact on your assets. If an asset is jointly owned, his creditors can only pursue his interest in the property. However, you should keep separate bank accounts to make sure that your funds are not seized by his creditors. Money held in a joint account can be withdrawn by either party and as such, the entire balance in a joint account can be reached by his creditors. I would advise your husband to set up a free consultation with a bankruptcy attorney. He may not be a candidate for bankruptcy; however, a bankruptcy attorney can advise him on how to deal with the debt.
    Answer Applies to: Alabama
    Replied: 8/5/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    Simply, the bank can repossess the car, sell it and collect from your husband the difference between the sales proceeds and the balance owed on the car loan plus costs. If your husband does not pay then the creditor can garnish his wages, levy your bank account and put a lien on any real estate you own. The creditor cannot proceed against his mother because she filed for bankruptcy. Any money in the bank in any account with your husband's name can be levied. Although all you have is community property and can be taken to satisfy your husband's debt, most likely the creditor will go after his wages, any bank accounts on which your husband appears as an owner and file a lien against any real estate in which your husband has title. Your husband is liable for 100% of the debt and there is nothing he can do about it but pay or settle it for less (except file bankruptcy himself).
    Answer Applies to: California
    Replied: 8/5/2011
    R. Steven Chambers PLLC | R. Steven Chambers PLLC
    Your husband is obligated to pay the debt since he and his mother jointly borrowed the money and now she has received a discharge from her obligation. You didn't say what happened to the car, but if the car hasn't been repossessed, unless he makes payments it will be. Then it will be sold and the bank will look to him for any remainder. If he doesn't pay they can come after what assets he has. That could include joint assets of yours and his, though the bank can only get at his interest in any jointly owned assets, not your interest.
    Answer Applies to: Utah
    Replied: 1/21/2013
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    When he cosigned the debt, he agreed to pay it. So he owes it. If he does not pay it, his assets (and his wages) AND your joint assets become targets. Depending on information you did not give he probably either needs to pay it or go bankrupt. He needs to see a lawyer to decide which.
    Answer Applies to: Georgia
    Replied: 8/5/2011
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