[WSBARP] Off Topic Issue - Bankruptcy/Community Property Question

Sat Apr 9 10:00:09 PDT 2022

Sam:

This article may give you a start. 

Chapter 13 While Getting a Divorce: Probably a Bad Idea (upsolve.org)
<https://upsolve.org/learn/chapter-13-and-divorce/> 

And this case may . may . touch on your issue. I just glanced at it, so
you'll have to parse it. 

Lillie Smith, Ch. 13, BK97-80710 (uscourts.gov)
<https://www.neb.uscourts.gov/sites/neb/files/opinions/Lillie_Smith%2C_Ch._1
3%2C_BK97-80710.pdf> 

I'm no divorce attorney, that's for darn sure. But did the decree that
distributed the auto to the wife say anything about the debt secured by it?
I'd have to check my own auto loan documentation, but I would be surprised
to find a due on sale clause in it. The auto was certainly community
property during the marriage. I would have thought that the H's attorney
would have made sure the debt went with the vehicle as between them. You're
right, of course, that this wouldn't preempt the lender's right to repo the
auto in the first instance, or to proceed against the H for a deficiency.
But I would be surprised if the decree didn't have the effect of
transferring ownership to the W, regardless of title. 

My very, very limited experience with personal bankruptcy tells me that the
W can probably stay collection on the auto loan through a Chap. 13 filing,
but the lender would probably have an opportunity to seek relief from the
stay from the court as a secured creditor. Also, H is still a borrower.
Lender can almost certainly seek to collect from him. Whether H would have
some sort of remedy against W would probably depend on the precise terms of
the divorce decree. 

My two cents and worth every penny. 

John J. Sullivan

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com>
On Behalf Of samuel at meylerlegal.com
Sent: Thursday, April 7, 2022 12:48 PM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com>; 'WSBA Probate
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Subject: [WSBARP] Off Topic Issue - Bankruptcy/Community Property Question

Mates,

I have an off-topic bankruptcy/community property question and was hoping
that one of you out there that practices bankruptcy law might be able to
help.  

H purchased a vehicle while H and W were married.  H was the only one on the
loan and the only one on title.  H and W get divorced and the W is awarded
the vehicle in the divorce.  Nobody makes payments on the vehicle for a
period and lender attempts to repossess the vehicle.  W files Chapter 13 BK.

Generally, I don't think that the divorce decree has any bearing on the
lender's rights, but does the divorce decree or even simply W's possession
of the vehicle give W the right to include the lender as a secured creditor
in the bankruptcy?  Does filing bankruptcy protect W from having the vehicle
repossessed given that she is not on the loan or title?

I appreciate any thoughts or legal authority on this and would love to chat
with someone knowledgeable in these matters.  Thanks.

Sam  

Samuel M. Meyler

Meyler Legal, PLLC 

1700 Westlake Ave. N., Ste. 200

Seattle, Washington 98109

Tel:  206.876.7770

Fax:  206.876.7771

Email:   <mailto:samuel at meylerlegal.com> samuel at meylerlegal.com

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