The problem is - that because the debt was incurred during the marriage - it's a joint debt.
In the handful of states with "community property" rules, most debts incurred by one spouse during the marriage are owed by both spouses.
In community property states, most debts incurred by either spouse during the marriage are owed by the "community" (the couple), even if only one spouse signed the paperwork for a debt. The key here is during
the marriage. So if you incur a debt, such as a student loan, while you're single, and then get married, it won't automatically become a joint debt.
In community property states, a couple's income is shared as well. All income earned by either spouse during marriage, as well as property bought with that income, is community property, owned equally by husband and wife. Gifts and inheritances received by one spouse, as well as separate property owned before marriage that's kept separate, are the separate property of one spouse. All income or property acquired before or after a divorce or permanent separation is also separate.
In a community property state, creditors of one spouse can go after the assets and income of the married couple to make good on joint debts (as stated before - in a community property state, most debts incurred during marriage are considered joint debts).
When Linda's business fails, she owes $45,000 to suppliers and other creditors. Because Linda and her husband live in a community property state, these creditors can sue both her and her husband to collect the money owed. Linda no longer has an income to take, but her husband's is significant, and her creditors are able to garnish $3,000 of her husband's income per month until the debts are paid off.
Creditors can go after joint assets in a community property state no matter whose name is XXXXX XXXXX title document to the asset (in CA they cannot go after the house).
For example, a business owner's name may not be on the title to her spouse's boat, but in most community property states, that won't stop a creditor from suing in court to take the boat to pay off the business owner's debts (assuming the boat was purchased with community funds, and not separate funds).
As to one spouse's separate debt, such as one spouse's child support obligation from a prior relationship, or a debt in one spouse's name only where the spouse hid the fact that he or she was married, a creditor can go after only that spouse's half of the community property to repay the debt.
In California, a judgment may be enforced for a period of ten years from date of entry. A judgment may be renewed for a period of ten (10) years after it has been entered for a period of five (5) years from the date of entry. The life of a Judgment therefore may be extended beyond the ten year period if it is timely renewed.
Judgments may be enforced (collected) in a variety of ways. An Abstract of Judgment recorded with the County Recorder in a county where defendant owns real property may create a judgment lien. This may require payment if certain real property is sold or refinanced. Other lien and enforcement mechanisms may be available in specific circumstances. If a debtor is a plaintiff in a different lawsuit, or a beneficiary in an estate proceeding, the creditor may be entitled to a lien against a recovery from the lawsuit or inheritance. Judgments may also be enforced by garnishment of wages.
So, you can defend this civil action certainly. If you are sure that you have paid on the alleged debt or incurred some of the debt within the last 4 years - they are within the statute of limitations to collect on the debt.
The collection company will agree to accept payments definitely. They do not want to go to court.
Usually a debtor can set up payment arrangements paying them 75 cents on the dollar over time.
The problem with filing bankruptcy is - that it costs about $2,500.00 to retain an attorney and file bankruptcy.
Moreover, the court would probably make you pay back some of this debt. So, by the time you get all done with that - you've paid off the debt indirectly.
I would advise that you contact Midland Funding and see what kind of payment plan you can negotiate with them.
I would inform them that your marital income is nominal and you have no assets but want to try and resolve this without going to court.
By saying that - they will realize there are little to no assets that they can garnish and will work with you setting up a payment plan.
I know this isn’t going to be the answer you want to hear, and it’s certainly not what I want to tell you.
However, I wish to be completely honest with you, so I feel obligated to not give you false hope.