Hello: This is PhillipsEsq. I am a licensed Attorney and I will be assisting you today.
on 4/23/2012 I asked a question about a boat loan. Things have taken a dramatic change for the worse for me. Since my last question, my ex-husband stopped paying for the boat. He let it get repossessed 8/2012. I only found out when I tried to refinance my mortgage for a lower rate and learned of the repossession. Had to give up on the refi. I called the bank about the matter, back in 2012, and was told the boat would go up for auction and Greg and I would be responsible for the difference. Of course our legal separation agreement, that he was solely responsible for the boat loan, carries no weight with a bank loan. I hadn't heard anything more about the matter until now. A collection agency is asking me for 5300. What about Greg, I ask. Oh he is filing for bankruptcy on this loan. So now they are coming after me solely. I have gotten some suggestions but am unsure if those are fact. Questions...
1) can a person file bankruptcy on just one loan, if yes, how much damage does it do to your credit report.
Response 1: Yes. The fact that you have filed for bankruptcy protection would stay on your credit file for up to 10 years. Creditors would now consider you a high credit risk making it impossible for you to obtain future financing. Your credit score would also take a hit, but by how much, I do not know.
2) I was told that there is a 3 year statutory limit to this debt. Is that true and if I tried to wait it out what would/could the collection agency do to me financially.
Response 2: Yes, that is correct. See Maryland Courts and Judicial Proceedings Sections 5-101 and 5-102. However, the Statute of Limitations on a debt deals with the time a creditor/collector has to file a lawsuit to collect on its debt or forever barred from bringing up the lawsuit. The creditor may still use other means to try to collect the debt such as telephone calls and letters. However, without the threat of lawsuit, there is really nothing the creditor/collector can do. So, a debtor does not have to pay debts that are passed the Statute of Limitations. Finally, if a creditor files a lawsuit, the fact that the Statute of Limitations has run on the debt is an Affirmative Defense and the debtor must request that the Court dismiss the case because the Statute of Limitations has run on the debt.
The Statute of Limitations on a debt starts to run from the time the debtor stopped paying on the debt.
Kindly note that paying anything on the debt will restart the Statute of Limitations period. So, the debtor must not agree to pay anything on a debt that has passed its Statute of Limitations.
If you ignore the collector's call or refuse to pay, the collector may file lawsuit to recover the deficiency and the Court costs. If or when they file a lawsuit for deficiency, for the balance on the loan after the auction, you should challenge the balance given to you by the lender (“creditor”) after the sale. You would have some defenses to their complaint for deficiency judgment. One of your defenses would be that the sale of the boat was not done in a commercially reasonable manner. Once you make this defense, the creditor would then have the burden to prove that all aspects of the sale were reasonable including the notice provided to you before the sale, the advertising made to the public, the timing of the sale of the boat and how the creditor ultimately got rid of the boat.
You would also have other defenses and counterclaims such as
(1) Was your personal property in the boat seized when the boat was repossessed?
(2) Were the creditor's expenses of repossession reasonable?
(3) Was the deficiency correctly computed?
(4) Deception in original purchase of the boat.
(5) Defects in the boat's subsequent performance.
(6) The terms of the financing.
(7) The creditor's debt collection conduct
and so on...
You can retain the services of a local consumer Attorney to assist you with the case. Most consumer Attorneys work on contingent fee basis and would not ask for upfront fees unless they win the case for you. Even then, you may not have to pay out of pocket as most Courts do award Attorney fees to prevailing consumers.
You can use the following sites to find local consumer Attorneys:
3) Is it true that the bank/collection agency might agree to lower the amount to 25,30...cents on the dollar amount.
Response 3: Yes. I have even see collectors accept 20 cents on a dollar because if you file for bankruptcy Chapter 7, they would get nothing.
4)If I pay any or all of this collection, what recourse do I have to get my money from Greg.
Response 4: You have to file lawsuit against him to enforce your Separation Agreement. This agreement is not discharged in his bankruptcy. What would be discharged in the bankruptcy would be his obligation to the lender AND NOT TO YOU. This distinction is very significant.
5) What chance would I have in civil court,to sue him for this amount and legal fees, if he indeed has filed for bankruptcy. Remember I have a signed, notarized legal separation agreement stating he is solely responsible for the loan. Dated in 2008.
Response 5: You have a very good chance because Property Settlement Agreement— your Separation Agreement is not dischargeable in a Chapter 7 bankruptcy, but can be discharged in a Chapter 13 if he lists his obligation to you under the Separation Agreement in his Chapter 13 Plan and make payments on the Agreement pursuant to his Chapter 13 Plan and completes his Chapter 13 Plan. Otherwise, the Property Settlement Agreement would not be discharged even in case of Chapter 13 Hardship Discharge. Hardship Discharge occurs when the Debtor is not able for one reason or another to complete the Chapter l3 Plan and ask the Court to grant him discharge of most of his debts anyway.