My sister ended a bad marriage in 2007 and returned to our home state to start her life over at age 50. Her divorce decree stated she was to sign their house over to her ex-husband and that he was to refinance to be able to keep the house. He has not held up his end of the bargain, and she is still getting calls about back payments.
Apparently the last mortgage payment was June 2007, one which she mailed. Her ex also reopened a credit card and maxed it out. My sister called the bank to take her name off the card. But the bank failed to tell her to send the request by mail, so it was not done. A couple years after returning to our home state, she suffered a heart attack with ongoing complications. Of course she has huge medical bills, even though she did have insurance.
My sister has an OK job, but it is not enough to dig her out of this hole. She cashed in her retirement while she was married to this guy and that money is gone, so she has nothing to fall back on! Is bankruptcy her only option?
You just discovered a major glitch with divorce decrees — for debt, sometimes they don’t have adequate teeth.
Divorce decrees are formal orders from the court that set post-marriage terms and conditions for assets, liabilities, child support and the like — a “she gets this bill and the toaster; he gets that one and the blender” kind of thing. They’re terrific when both parties behave like adults and pay accordingly. However, if one doesn’t and allows an account to go delinquent, the creditor can look past the decree and instigate collection activity against the other party (in this case, your sister). Banks have that right if the loan or credit line was granted while the marriage was intact. Anyone on the account is under contract to pay.
This doesn’t mean your sister’s situation is hopeless — but she does need to need to check back in with her lawyer. By not taking care of the refinanced mortgage as he should have, her ex violated the decree. The court doesn’t view this type of behavior fondly. In response, the judge may force him to deal with the money owed by enacting a wage garnishment or property levy.
So that’s debt Number 1 — if she can get out of it by returning to the courtroom, sis will be able to brush that burden from her shoulders.
Now debt Number 2: that credit card. Your sister did the right thing by calling to have her name removed from the account. If her ex reopened it after the legal separation, it’s highly unlikely that she will be held responsible for the balances that he ran up on it. Have her contact the creditor immediately, but this time in writing. In a letter, she needs to explain that she never gave her approval for the account and that it was opened after he moved out (assuming this is so). She should also provide additional proof, such as utility statements that have been sent to his other address. She must state clearly that her name should not be on the account.
That leaves what sounds like the final debt:
medical bills. Health issues can be outrageously expensive, even with insurance coverage. Your sister has a couple of options to deal with those:
1. Negotiate with the doctor or hospital. Given her circumstances, they may be willing to come down on the price or accept small monthly payments.
2. Obtain a personal loan. Her credit may be broken, but hopefully her relationships aren’t. Perhaps she can borrow from a loved one and then pay that person back at a reasonable pace.
Declare bankruptcy. Medical bills are a major reason people file for bankruptcy, as is divorce. If she can’t pay and qualifies to file, she can wipe out allowable unsecured debts and start fresh.
Present this information to your sister. Only she can make the final decision. What’s most important is that, while her body continues to recover, she also regains her financial footing.
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