In-Laws and Bankruptcy

[legal_noob]

What is the name of your state (only U.S. law)? WA


My in-laws racked up a considerable amount of debt 10+ years ago (to the tune of hundreds of thousands of dollars). After their house of cards collapsed on them, my mother-in-law filed for bankruptcy, got on some kind of payment program, and made payments for the last 10 years and just recently finished her obligation. My father-in-law did not file, and is still constantly harassed by debt collectors (not saying that he doesn't deserve this). My father-in-law is in considerably worse health than my mother-in-law, so my question is whether or not any of "his" remaining outstanding debt will be able to find it's way back onto my mother-in-law should he pass away before she does. I've been googling for 3+ hours and can no longer see straight from trying to figure this out!

Thanks.

 

[LdiJ]

What is the name of your state (only U.S. law)? WA


My in-laws racked up a considerable amount of debt 10+ years ago (to the tune of hundreds of thousands of dollars). After their house of cards collapsed on them, my mother-in-law filed for bankruptcy, got on some kind of payment program, and made payments for the last 10 years and just recently finished her obligation. My father-in-law did not file, and is still constantly harassed by debt collectors (not saying that he doesn't deserve this). My father-in-law is in considerably worse health than my mother-in-law, so my question is whether or not any of "his" remaining outstanding debt will be able to find it's way back onto my mother-in-law should he pass away before she does. I've been googling for 3+ hours and can no longer see straight from trying to figure this out!

Thanks.

In a way yes. His estate will be responsible for his debts and no assets from his estate can be distributed to anyone until they have been liquidated and applied towards the debts. I also believe that WA is a community property state so that is an issue as well. That means that any asset that belongs to one of them, also belongs to the other (if they accrued during the marriage) and the same applies to debts.

At the same time however, any debt that is past the statute of limitations (unless a judgment was obtained) would be uncollectable.

So, bottom line, its complicated and each debt could have a different position/outcome.

 

[legal_noob]

In a way yes. His estate will be responsible for his debts and no assets from his estate can be distributed to anyone until they have been liquidated and applied towards the debts. I also believe that WA is a community property state so that is an issue as well. That means that any asset that belongs to one of them, also belongs to the other (if they accrued during the marriage) and the same applies to debts.

At the same time however, any debt that is past the statute of limitations (unless a judgment was obtained) would be uncollectable.

So, bottom line, its complicated and each debt could have a different position/outcome.

Yeah, WA is a community property state, which is part of what has me confused on whether any of "his" debt will be able to pass back onto my mother-in-law after he passes. All of the debt they originally had was accumulated after they were married. Once everything fell apart (couldn't get any more loans, lost their business etc) my mother-in-law opted to file bankruptcy and get one some kind of a payment plan which she followed and was able to get herself out of debt. I just don't understand if, with WA being a community property state, she will "inherit" all of 'his' (formerly their) debt once he passes seeing as how they are still married. So confusing!

 

[latigo]

What is the name of your state (only U.S. law)? WA

My in-laws racked up a considerable amount of debt 10+ years ago (to the tune of hundreds of thousands of dollars). After their house of cards collapsed on them, my mother-in-law filed for bankruptcy, got on some kind of payment program, and made payments for the last 10 years and just recently finished her obligation. My father-in-law did not file, and is still constantly harassed by debt collectors (not saying that he doesn't deserve this). My father-in-law is in considerably worse health than my mother-in-law, so my question is whether or not any of "his" remaining outstanding debt will be able to find it's way back onto my mother-in-law should he pass away before she does. I've been googling for 3+ hours and can no longer see straight from trying to figure this out!

Thanks.

You need to provide more information and more accurately.(Not that it would necessarily help or even be available to you.)

Your post states that through her bankruptcy filing mother-in-law "got on some kind of payment program and made payments for the last ten years." That is not possible. The maximum duration of a Chapter 13 Plan is 60 months. (Title 11 U. S. Code Section 1322(a)(4) With most running for 36 months.

And there are no other such "payment program(s)" contemplated under the Federal Bankruptcy Code.

Also you don't state whether or not she was granted a discharge under Section 1328(a) of the Bankruptcy Code. And if so, were any of her scheduled creditors excluded from the discharge?

Nor do you tell us what creditors were scheduled in her petition - debts owed by the community or her separate debts or both.

Neither are we given to know whether or not she may have reaffirmed certain debts owed to secured creditors. (Making payments to her creators beyond the 60 months seems suggestive that she did reaffirm some of those debts. (Why she would do so being as mysterious as why she filed separately.)
_________ _________

The only conclusion that can be reached here is the obvious. She cannot be held "personally" liable for any debts that were discharged through her bankruptcy filing.

Which does not mean that should she survive her husband, she will succeed to the community estate - either by testate or intestate distribution - totally free of the claims of her husband's creditors.
__________________

What she should have done is to have first divorced the knot head who foolishly refused to join in and then filed for debtor's relief.

Now there is a mixed bag of creditors some of which can reach out to community assets and some can't. Double . . . triple dumb.

ALSO, her making payments to creditors over that ten year period could have a detrimental impact on any defense based upon any applicable statute of limitations
____________________

[SUP](Incidentally for what its worth, LdiJ wouldn't know the Federal Bankruptcy Code from a Sears Tool Catalogue.)[/SUP]

 

[legal_noob]

You need to provide more information and more accurately.(Not that it would necessarily help or even be available to you.)

Your post states that through her bankruptcy filing mother-in-law "got on some kind of payment program and made payments for the last ten years." That is not possible. The maximum duration of a Chapter 13 Plan is 60 months. (Title 11 U. S. Code Section 1322(a)(4) With most running for 36 months.

And there are no other such "payment program(s)" contemplated under the Federal Bankruptcy Code.

Also you don't state whether or not she was granted a discharge under Section 1328(a) of the Bankruptcy Code. And if so, were any of her scheduled creditors excluded from the discharge?

Nor do you tell us what creditors were scheduled in her petition - debts owed by the community or her separate debts or both.

Neither are we given to know whether or not she may have reaffirmed certain debts owed to secured creditors. (Making payments to her creators beyond the 60 months seems suggestive that she did reaffirm some of those debts. (Why she would do so being as mysterious as why she filed separately.)
_________ _________

The only conclusion that can be reached here is the obvious. She cannot be held "personally" liable for any debts that were discharged through her bankruptcy filing.

Which does not mean that should she survive her husband, she will succeed to the community estate - either by testate or intestate distribution - totally free of the claims of her husband's creditors.
__________________

What she should have done is to have first divorced the knot head who foolishly refused to join in and then filed for debtor's relief.

Now there is a mixed bag of creditors some of which can reach out to community assets and some can't. Double . . . triple dumb.

ALSO, her making payments to creditors over that ten year period could have a detrimental impact on any defense based upon any applicable statute of limitations
____________________

[SUP](Incidentally for what its worth, LdiJ wouldn't know the Federal Bankruptcy Code from a Sears Tool Catalogue.)[/SUP]

Sorry, I guess the information I got 2nd hand from my wife won't be sufficient to untangle this mess. I'll try to find out more details and try again. Thanks for your help!

 

[despritfreya]

I feel that I need to chime in here because of technical nuances that prior posters may or may not know.

My mother-in-law filed for bankruptcy, got on some kind of payment program, and made payments for the last 10 years and just recently finished her obligation.

We need to know what Chapter bk was filed. If the payment plan exceeded 5 years it was not a Chapter 13. It could have been a Chapter 11, which, unless the amount of debt exceeded the debt limits of a 13 (as established when she filed) is not likely but for the fact that you indicate there was a business which, when adding personal guarantees, may have put her over the debt limit.

My father-in-law did not file, and is still constantly harassed by debt collectors. . . All of the debt they originally had was accumulated after they were married. . . My mother-in-law opted to file bankruptcy. . .

The bk your MIL filed does not protect your FIL from attempts to collect against his sole and separate assets (if any). Creditors are free sue and seek a judgment against him “solely”. The bk your MIL filed protects her AND the marital community. Creditors, while they can get a judgment against your FIL, simply cannot collect against community assets if your MIL obtains a discharge of debt that is community in nature. See 11 USC 524(a)(3). So long as there is a “community” and your FIL does not acquire sole and separate property (like an inheritance or real estate only in his name), he should be fine.

My father-in-law is in considerably worse health than my mother-in-law, so my question is whether or not any of "his" remaining outstanding debt will be able to find it's way back onto my mother-in-law should he pass away before she does. . . Will (MIL) "inherit" all of 'his' (formerly their) debt once he passes seeing as how they are still married.

If this debt was run up before your MIL filed the bk and the creditors were listed in her bk and she obtains a discharge, the answer is “no”.

I hope the above helps.

Des.