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.
[tags] judgment proof debtor, civil suit, fair debt collection, Chapter 7, means test, median income test, household income and bankruptcy [/tags]