How Bankruptcy Can Save Your Marriage

The Angry Spouse 

Maryland bankruptcy attorney who has been practicing for over 30 years we run across many situations that seem to repeat themselves on a regular basis. 

• The angry spouse who cannot understand why the mortgage, credit cards, car loans were not paid on time.
• The angry spouse who cannot understand why their partner has incredibly high credit card bills.
• The angry spouse who is shocked that they were not informed over the course of several months that the bills were becoming unmanageable.

A Story about My Fireman Friend

My favorite story is my friend the fireman. He lived in a nice home in a good neighborhood. If you look out front he had a camper, a Harley, and a four wheeler.  He prided himself on paying his bills on time, and on having excellent credit.

The farthest thing from his mind was the possibility that he might have to get help from a bankruptcy lawyer. As is often the case he felt filing bankruptcy is wrong.

My fireman friend was a hard worker, put in overtime and made great money. His spouse also worked and was responsible for the household expenses, kids’ activities and paying the bills.

When they came to see me they were several months behind on the mortgage, the credit cards were “maxed out” and husband was furious, making a scene about the state of the bills and the importance in his family of paying them on time. Filing bankruptcy resolved their financial difficulties and their conflicts.  

Bankruptcy as a Solution for Financial Problems and Personal Relationship Issues

This scene repeats itself almost on a weekly basis in our office. The meeting is often more of a marital counseling session to help people who are terribly overloaded with debt to realize that the solution of filing bankruptcy makes sense and will help rebuild the credit  as well as make the family better able to communicate about the  bills and finances.

The angry spouse in most on these cases is either involved with the household expenses and does not attend to all the things that need to be paid of the household. Or in some cases the household is managed with a relatively “separate” budget system when the spouse doing mostly the household chores and duties does not have enough funds to pay for all the things that need to be provided. 

Bring Your Angry Spouse to a Bankruptcy Lawyer

In many cases an experienced bankruptcy lawyer can help deal with the angry spouse by helping the parties communicate better, helping the spouse who gets blamed deal with their very upset partner. A quick glance at the statements will show the cards have been used to pay normal household expenses not things the family does not need. It is usually process of educating the angry spouse so they can accept some responsibility for the problem.

Forcing A Lender to Take Title to Real Estate in Chapter 13

Does Surrendering the Property End the Ownership of the Property?

An experienced Maryland bankruptcy attorney can help you force a lender to take title to unwanted real estate. One serious problem some clients encounter is how to get real estate out of their name when they do not want it.  Most clients think once they file a Chapter 7 bankruptcy and express their intention to surrender their real estate that ends their ownership in the house and they are free from the obligations of home ownership. Chapter 13  bankruptcy can provide a better alternative.
There is no question the clients obligations on the mortgage will be discharged (though the mortgage will not be removed from the property) and once the mortgage company forecloses they will not owe the mortgage company a balance. What happens if the mortgage company does not want to foreclose and lets the property sit idle in the clients name for years?

Rent Free Option

Not everyone sees this as a problem. Many clients simply stay in the house until the foreclosure sale is imminent and live “rent free” for months or years. Others who are more enterprising might decide to rent the property out on a month to month basis until foreclosure and use the income to take care of upkeep and as extra income without paying the mortgage. Not everyone is happy with this. For the client who just wants all the mess to be over with and wants to be completely free, or who does not want to live in the house or rent it these options do not work.

Obligations for Real Estate Owners

Why should the client care? Real estate ownership carries with it multiple obligations. City water bills, taxes, city and county regulations regarding upkeep, keeping the lawn mowed, clearing trash and debris and possibly boarding the property up. What if unwanted squatters move in and use the home as a drug haven.

Then there are the HOA fees and condo fees. Those pesky HOA and condo fee obligations only are discharged up to the date of the bankruptcy filing. Post bankruptcy fees become due immediately each month until the property is not titled in the client’s name.

Condo Fees

The Bankruptcy Code allows to Court to “provide for the vesting of property of the estate, on confirmation of the plan or at a later time, in the debtor or in any other entity;” 11 U.S.C. § 1122(b)(9). Until recently the bankruptcy courts in Maryland had not had to deal with the issue. We were able to free a client from burdensome condo fees of more than $700.00 per month by providing in the plan that the confirmation of the Chapter 13 plan would fully transfer title to the mortgage company once the plan was approved. The Chapter 13 plan was approved after a hearing.

Other Alternatives

There are other alternatives to this novel procedure. A sale of the property “free and clear” of the mortgage companies interest if the client is no longer living at the property to a buyer who offers less than the amount of the mortgage can also be used to force a change of title.

This option however requires that a buyer be found at some price and often properties that lenders refuse to foreclose are not desirable at any price.