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BAP Explains the "Community Property Discharge" When Only One Spouse Files
Yes, we are saying the same thing.
Thanks for the follow-up.
Peter
Patrick Green wrote:
Peter:
We may be saying the same, but the distinction I wanted to emphasize is between the personal liability of a spouse for a debt and the liability of the community property of a spouse who is not personally liable. If a non-filing spouse is not personally liable for a debt, her CP is liable for the debts of the non-filing spouse both in a bankruptcy and in a non-bankruptcy context. Thus there is no distinction between the two forums on this point. What BK adds is that discharge injunction for the non-fling personally liable spouse. After a post BK divorce with a complete division of property, a non-filing spouse who was not personally liable for the debts of the filing spouse is not subject under CA law to collection for those debts and thus does not need protection of the discharge injunction.
In your non-divorce case, there was CP so under state law the property was liable, but protected by the BK injunction. If the non-filing spouse had personal liability for the debt, what was the tactical reason for her not also filing?
Pat
Patrick T. Green
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com
Sent: Wednesday, December 05, 2007 9:57 AM
To: cdcbaa@yahoogroups.com
Subject: RE: [cdcbaa] BAP Explains the "Community Property Discharge" When Only One Spouse Files
Pat,
Sections 541(a)(2)(B) and 524(a)(3) work together, post-discharge of filing spouse, to prevent collection from community property of the spouses where the non-filing spouse remains personally liable on the debt.
These are the facts of my cleint's case before EC in 2006. EC awarded sanctions against the junk debt buyer that attempted, post-discharge, to collect from the community property residence by recording a Lis Pendens in it's suit against the non-filing spouse. The LASC denied motion to expunge the Lis Pendens so I had to reopen the bankruptcy case of the wife and pursue sanctions that ultimately resulted in the voluntary release of the lien.
The non-filing spouse remains liable to the creditor, but the judgment against the non-filing spouse can not be collected from the earnings of either spouse while they remain married, nor from their other community property assets. However, if they divorce or the filing spouse passes, then the non-filing spouse is subject to collection; or perhaps may come back to one of us to obtain his bankruptcy relief.
Peter
Patrick Green wrote:
Final note, the BAP points out that if there is a subsequent divorce,
the community property discharge will no longer protect property of a
non-filing spouse.
This final note gives me the same feeling I was almost always get when I read a BK case that addresses CA marital property law. BK judges are addressing issues which are controlled by state law, but their knowledge of the state law is almost always paper thin and they dont seem to be willing to take the time to learn it. After divorce, neither the filing nor the non-filing spouse will have any community property (because there is no longer any community) and thus the claim of the creditor, based on their ability to go after the all of the community property (i.e. both halves) for the debt of the filing spouse, will not be able to go after the non-filing now single person because they are not personally liable under state law.
If the non-filing spouse had been an obligor on the original debt (the community claim ) both the CP and his or her separate property would have been liable for the obligation, regardless of the bankruptcy.
Two cents more: I also think that a post-nup that makes each spouses earnings separate property cannot be a fraudulent conveyance, because earnings are speculative. They dont exist when the agreement is made. I think that all the CA cases re post nups and fraudulent conveyances address the transfer of property from one spouse to the other.
Patrick T. Green
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com
Sent: Sunday, December 02, 2007 5:48 PM
To: cdcbaa@yahoogroups.com
Subject: RE: [cdcbaa] BAP Explains the "Community Property Discharge" When Only One Spouse Files
This is not news - and not impacted by BAPCPA. There is one more ps to be added here. If husband dies, community property also ceases to exist.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal Specialization.
Business bankruptcy specialist cert. by Amer. Bd. of Certification
The post was migrated from Yahoo.
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Peter:
We may be saying the same, but the distinction I wanted to emphasize is
between the personal liability of a spouse for a debt and the liability of
the community property of a spouse who is not personally liable. If a
non-filing spouse is not personally liable for a debt, her CP is liable for
the debts of the non-filing spouse both in a bankruptcy and in a
non-bankruptcy context. Thus there is no distinction between the two forums
on this point. What BK adds is that discharge injunction for the non-fling
personally liable spouse. After a post BK divorce with a complete division
of property, a non-filing spouse who was not personally liable for the debts
of the filing spouse is not subject under CA law to collection for those
debts and thus does not need protection of the discharge injunction.
In your non-divorce case, there was CP so under state law the property was
liable, but protected by the BK injunction. If the non-filing spouse had
personal liability for the debt, what was the tactical reason for her not
also filing?
Pat
Patrick T. Green
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com
The post was migrated from Yahoo.
Pat,
Sections 541(a)(2)(B) and 524(a)(3) work together, post-discharge of filing spouse, to prevent collection from community property of the spouses where the non-filing spouse remains personally liable on the debt.
These are the facts of my cleint's case before EC in 2006. EC awarded sanctions against the junk debt buyer that attempted, post-discharge, to collect from the community property residence by recording a Lis Pendens in it's suit against the non-filing spouse. The LASC denied motion to expunge the Lis Pendens so I had to reopen the bankruptcy case of the wife and pursue sanctions that ultimately resulted in the voluntary release of the lien.
The non-filing spouse remains liable to the creditor, but the judgment against the non-filing spouse can not be collected from the earnings of either spouse while they remain married, nor from their other community property assets. However, if they divorce or the filing spouse passes, then the non-filing spouse is subject to collection; or perhaps may come back to one of us to obtain his bankruptcy relief.
Peter
Patrick Green wrote:
Final note, the BAP points out that if there is a subsequent divorce,
the community property discharge will no longer protect property of a
non-filing spouse.
This final note gives me the same feeling I was almost always get when I read a BK case that addresses CA marital property law. BK judges are addressing issues which are controlled by state law, but their knowledge of the state law is almost always paper thin and they dont seem to be willing to take the time to learn it. After divorce, neither the filing nor the non-filing spouse will have any community property (because there is no longer any community) and thus the claim of the creditor, based on their ability to go after the all of the community property (i.e. both halves) for the debt of the filing spouse, will not be able to go after the non-filing now single person because they are not personally liable under state law.
If the non-filing spouse had been an obligor on the original debt (the community claim ) both the CP and his or her separate property would have been liable for the obligation, regardless of the bankruptcy.
Two cents more: I also think that a post-nup that makes each spouses earnings separate property cannot be a fraudulent conveyance, because earnings are speculative. They dont exist when the agreement is made. I think that all the CA cases re post nups and fraudulent conveyances address the transfer of property from one spouse to the other.
Patrick T. Green
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com
Sent: Sunday, December 02, 2007 5:48 PM
To: cdcbaa@yahoogroups.com
Subject: RE: [cdcbaa] BAP Explains the "Community Property Discharge" When Only One Spouse Files
This is not news - and not impacted by BAPCPA. There is one more ps to be added here. If husband dies, community property also ceases to exist.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal Specialization.
Business bankruptcy specialist cert. by Amer. Bd. of Certification
The post was migrated from Yahoo.