Foreclosure on property awarded to wife. 6 yrs later DC trying to collect

[newenglanders]

What is the name of your state (only U.S. law)? NH/MA

Good evening,

Here's my situation:

1. In a 2006 divorce, my wife was awarded the marital home. It's a NH property and we were both NH residents. Divorce Decree specifically stated that I was to sign the quit claim and she was responsible for paying the mortgage/taxes/ins/etc. However, due to her income she was unable to amend/refi the mortgage so my name remained on it.
2. In 2008 she fell far enough behind on payments to result in foreclosure. I believe the auction netted some $50k less than the loan amount. She filed bankruptcy that year as well and the foreclosure was included. I did not file (and have never filed) bankruptcy.
3. I changed residency to MA in Q1 2013.
4. August 2014, we individually received letters from an attorney representing a debt collector for FNMA. In it they state that we owe the $50-ish with all the usual additional language about verifying the debt, etc.​

I assume because my ex was unable to refi/amend, and because both our names were on the mortgage, that legally I was on the hook for the shortfall to the lender. And in turn (based on the language in the final decree) my wife would be on the hook to me for costs that I incur as a result of the foreclosure and the debt collector - though I assume I'd have to pursue her in court if ever it became an issue.

Should I respond to the debt collector with a standard C&D letter? It seems the NH SOL (3 yrs) for this debt would have run out back in 2011. In the letter would I simply not acknowledge the debt and state that if it's brought to court I'll raise the SOL?

As for my ex, should she write a C&D and state that it was discharged in bankruptcy?

Any insight would be appreciated. Thank you.

NE

 

[FlyingRon]

Not enough information here. If they have a judgement against you for the deficiency, the SOL means squat.
A C&D letter will forestall phone calls, but it won't stop written communications or further activity on the collection.

 

[newenglanders]

Not enough information here. If they have a judgement against you for the deficiency, the SOL means squat.
A C&D letter will forestall phone calls, but it won't stop written communications or further activity on the collection.

Good morning Ron,

What sort of additional information would be helpful in this case? I'd be happy to provide what I can.

There does not appear to be a judgement - at least none about which I am aware at this point. Judgements would typically show up in the detailed financial background checks done by employers in my industry and I've been through two such checks since 2008.

The letter I just received appears to be a standard probing debt validation letter. If you don't respond within X days we'll assume the debt is valid. If you respond in writing we'll provide Y. It appears it simply took the creditor/collector several years to get its act together to pursue the debt. If that's the case I would think a simple C&D and SOL reference would be sufficient, but I want to make sure that is the case for this type of debt as well.

I'd also like to know if my understanding is correct based on the context I've provided here and short of posting relevant sections of the divorce decree verbatim. A court ordered me to sign the house over to my ex in 2006, but from what I understand it can't order the lender to remove my name from the mortgage. If for any reason I was unable to rely on the SOL at this point, the collector could seek such a judgement (from which my wife would be protected because it was discharged in her bankruptcy, but I would have no such protection) and I'd have to pursue her in court to recover any costs because the divorce decree (which was very clear on this point) made all financial matters related to the marital property her responsibility.

NE

 

[Ohiogal]

Good morning Ron,

What sort of additional information would be helpful in this case? I'd be happy to provide what I can.

There does not appear to be a judgement - at least none about which I am aware at this point. Judgements would typically show up in the detailed financial background checks done by employers in my industry and I've been through two such checks since 2008.

The letter I just received appears to be a standard probing debt validation letter. If you don't respond within X days we'll assume the debt is valid. If you respond in writing we'll provide Y. It appears it simply took the creditor/collector several years to get its act together to pursue the debt. If that's the case I would think a simple C&D and SOL reference would be sufficient, but I want to make sure that is the case for this type of debt as well.

I'd also like to know if my understanding is correct based on the context I've provided here and short of posting relevant sections of the divorce decree verbatim. A court ordered me to sign the house over to my ex in 2006, but from what I understand it can't order the lender to remove my name from the mortgage. If for any reason I was unable to rely on the SOL at this point, the collector could seek such a judgement (from which my wife would be protected because it was discharged in her bankruptcy, but I would have no such protection) and I'd have to pursue her in court to recover any costs because the divorce decree (which was very clear on this point) made all financial matters related to the marital property her responsibility.

NE

Did the court order your ex to hold you harmless and indemnify you? If not, then you may have contempt motion BUT you don't have a method by which you can collect against her.

 

[newenglanders]

Did the court order your ex to hold you harmless and indemnify you? If not, then you may have contempt motion BUT you don't have a method by which you can collect against her.

Yes, that correct. It did hold me harmless and indemnify me. I failed to mention that earlier, thank you.

If there's no current judgement, and it was a 2008 foreclosure, is it fairly safe to say the NH SOL applies? If so, might a standard C&D letter suffice at this point to put the ball back in the collector's court?

 

[latigo]

Good morning Ron,

What sort of additional information would be helpful in this case? I'd be happy to provide what I can.

There does not appear to be a judgement - at least none about which I am aware at this point. Judgements would typically show up in the detailed financial background checks done by employers in my industry and I've been through two such checks since 2008.

The letter I just received appears to be a standard probing debt validation letter. If you don't respond within X days we'll assume the debt is valid. If you respond in writing we'll provide Y. It appears it simply took the creditor/collector several years to get its act together to pursue the debt. If that's the case I would think a simple C&D and SOL reference would be sufficient, but I want to make sure that is the case for this type of debt as well.

I'd also like to know if my understanding is correct based on the context I've provided here and short of posting relevant sections of the divorce decree verbatim. A court ordered me to sign the house over to my ex in 2006, but from what I understand it can't order the lender to remove my name from the mortgage. If for any reason I was unable to rely on the SOL at this point, the collector could seek such a judgement (from which my wife would be protected because it was discharged in her bankruptcy, but I would have no such protection) and I'd have to pursue her in court to recover any costs because the divorce decree (which was very clear on this point) made all financial matters related to the marital property her responsibility.

NE

If you want to find the real source of all your present financial troubles, then look to the person that (mis)represented you in the divorce case and foolishly allowing you to divest yourself of ownership in the home on the slim hope that she would indemnify you on the mortgage note.

Also, (at least it appears so) the attorney that didn't advise you of your rights under Section 523(15) of the Bankruptcy Code that would have permitted you to file a creditor's claim in her bankruptcy case followed by initiating an adversary proceedings objecting to her being discharged of any obligation to you under the indemnity clause of the divorce decree; to-wit:

"(15) (Exceptions to discharge) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record . . . . "

If you did not follow up as indicated, that is, preserving your rights to be indemnified of responsibility on the mortgage note, then you have no legal recourse against her.
______________________________

Now it has been suggested that you might be able to have her cited as being in contempt of the family court order of indemnification. Personally I have serious doubts that such a court retains jurisdiction over such issues. Or that she could be held in contempt for not paying a debt discharged in bankruptcy.

What I know for certain is that in order for her to be held in contempt it must be convincing shown that she "willfully failed" to make the mortgage payments. Meaning that she neglected making the payments, yet was financially able to so. And that burden of proof would be on your shoulders.

Moreover, an order finding her in contempt of court won't show up as an asset in a financial statement.

In sum, you are walking the plank and its a short board.

 

[Zigner]

Now it has been suggested that you might be able to have her cited as being in contempt of the family court order of indemnification. Personally I have serious doubts that such a court retains jurisdiction over such issues. Or that she could be held in contempt for not paying a debt discharged in bankruptcy.

There is nothing to indemnify until the OP is forced to pay the debt on her behalf. At THAT point, indemnification kicks in. The ex may have problems if she didn't include the OP as a creditor in the BK.

 

[TigerD]

How did you not see this on your credit report for the past six years?

You need an attorney for this. Take some time to search and be ready to spend several thousand dollars.

DC

 

[latigo]

There is nothing to indemnify until the OP is forced to pay the debt on her behalf. At THAT point, indemnification kicks in. The ex may have problems if she didn't include the OP as a creditor in the BK.

But would the OP be a "creditor" before the "indemnification kicks in"?

[SUP]Would bigun please step in and bail me out of this?[/SUP]

 

[bdancer]

Not enough information here. If they have a judgement against you for the deficiency, the SOL means squat.
A C&D letter will forestall phone calls, but it won't stop written communications or further activity on the collection.

Has there been some big change in the FDCPA? If there's no judgment, a cease contact letter would stop all contact except for lawsuit notices.

 

[FlyingRon]

Has there been some big change in the FDCPA? If there's no judgment, a cease contact letter would stop all contact except for lawsuit notices.

You better read the FDCPA again. It's not so limited.
Further, if the collector is in fact the person who owns the debt, the FDCPA doesn't apply at all.
And as I stated in the post you responded to, there may very much be a judgement here.

 

[newenglanders]

You better read the FDCPA again. It's not so limited.
Further, if the collector is in fact the person who owns the debt, the FDCPA doesn't apply at all.
And as I stated in the post you responded to, there may very much be a judgement here.

Hi Ron, I have a few clarifications and comments based on recent responses.

I would imagine if a judgement existed the letter I'd have received would have been quite different. This was not a letter to inform me of my obligations based on a past judgement. Rather, it was a plain vanilla debt collection letter of the type one might receive early in the debt collection process. Under what set of circumstances would an attorney not make it a point to reference a judgement if one existed?

Unless I am mistaken, the debt ownership is irrelevant at this point since the SOL has long passed. It appears neither creditor nor collection agency can collect via Court. In this case my ex's foreclosure was executed in 2008 and NH SOL would have run out by Fall 2011. Further, it appears NH's State Act applies here even if the FDCPA does not. However, I'm not an attorney and felt I should at least inquire here on the forum before responding to the DC's letter.

Re: http://doj.nh.gov/consumer/sourcebook/credit-debt-collection.htm

Hi DC,

I did see this appear on my credit report eventually. What began as a series of late payment entries on my report when my ex stopped making payments eventually showed up as a default. I did ask her about the late payments and I was told that she's addressing it without any further detail.

As far as I am aware I was never named as creditor during her bankruptcy. I assume I would have received some sort of letter informing me if that was the case. I only became aware that she filed bankruptcy months after it was complete. Is it possible that I was named as a creditor and somehow not informed? How would I even go about researching it?

 

[FlyingRon]

Written contracts under seal are good for 20 years in NH. The SOL has NOT expired. A mortgage (home equity, second mortgage, whatever) will almost certainly be a contract under seal.

 

[Zigner]

But would the OP be a "creditor" before the "indemnification kicks in"?

[SUP]Would bigun please step in and bail me out of this?[/SUP]

That's a good point too...

 

[newenglanders]

Written contracts under seal are good for 20 years in NH. The SOL has NOT expired. A mortgage (home equity, second mortgage, whatever) will almost certainly be a contract under seal.

I stand corrected (All the more reason why I am glad I posted here. It's a great resource for those of us who haven't a clue.).

Using the language in your response I was able to Google this regarding the State of NH SOL, thank you Ron:

"Notes secured by a mortgage: 20 years and applies even if the mortgage has been foreclosed, (RSA 508:6)."

Of course I am very concerned...this is a very serious issue and no trivial debt created by that foreclosure. And now it appears I have no SOL defense. So it seems I do have to address this with the DC. Further, I'll never be able to recover anything from my ex financially, even if I could successfully sue her in court due to any judgements obtained against me. So at this point it looks like fallout from the foreclosure on her home may now fall entirely on me.

My only alternative may be to file bankruptcy. At what point does one file bankruptcy? Is there a difference in impact between filing before or after a debt becomes a judgement? And we're planning to relocate from MA to NH in a few months, does it matter which State I choose to file in with regard to the impact? Is one more favorable than the other?

I'm not even sure where to begin. I don't have the funds to retain an attorney as it is, and this most definitely seems like it's going to require one.

Thank you all for your responses thus far. As painful as it is to read it has been an eye opener.