Central District Consumer Bankruptcy Attorney's Association

Dave is right. Below is from a memo I did for my boss and mentor
Ray Aver on a case of his.
A debt is an obligation incurred by a married person before or
during the marriage. California Family Code Section 902. Reynolds
& Reynolds v. Universal Forms (CD CA 1997) 965 F. Supp. 1392,
1396. A contract debt is incurred at the time it is made. Fam Code
Section 903. Marriage of Feldner (1995) 40 CA4th 617, 619.
Contract is made at the time the consideration is given and
received. Feldner.
Section 902. "Debt" means an obligation incurred by a married
person before or during marriage, whether based on contract, tort,
or otherwise.
section 903 "A debt is 'incurred' at the following time: (a) In the
case of a contract, at the time the contract is made. (b) In the
case of a tort, at the time the tort occurs. (c) In other cases, at
the time the obligation arises."
Community Property is liable for either spouses premarital and pre
separation debts. Fam Code Section 910. CP liability for a debt
does not include the period during which the spouses are living
separate and apart. 11601 Wilshire Assoc v Grebow, (1998) 64 CA 4th
453, 458. Debt doesn't have to be incurred for the benefit of the
community unless the claim is for a tort.
Family Code Section 910. (a) Except as otherwise expressly provided
by statute, the community estate is liable for a debt incurred by
either spouse before or during marriage, regardless of which spouse
has the management and control of the property and regardless of
whether one or both spouses are parties to the debt or to a judgment
for the debt. (b) "During marriage" for purposes of this section
does not include the period during which the spouses are living
separate and apart before a judgment of dissolution of marriage or
legal separation of the parties
Jon Hayes
ps I had a case where my client, a defendant, died during
trial. I did some research but forgot how it went but my client was
dismissed out of the case. The creditor then files a claim in the
probate estate. Here there would be nothing to probate because the
assets are all part of the bankruptcy estate (if I have the facts
right). Jon
wrote:
> I didn't catch the original question, have been a little busy.
But in
> DM's example, I disagree with his conclusions. With due respect, I
> don't believe it has anything to do with the use of the credit.
If it's
> H's card and W does not sign on it, then H's separate property AND
the
> community property are liable for the debt -- regardless of use.
If W
> signs on the account, then her separate property is also liable
for the
> debt. DM's result is correct as between H and W if they are
divorcing,
> but those rules have nothing to do with the rights of third party
> creditors.
>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem
> 500 N. Brand Blvd., #460, Glendale, CA 91203
> 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
>
>
>
>
Behalf
> Of Dennis McGoldrick
> Sent: Tuesday, July 12, 2005 5:53 AM
> To: cdcbaa@yahoogroups.com
> Subject: Re: [cdcbaa] Does wife's death extinguish her sole debts
in
> Schedule F?
>
>
> ---Maybe David should pitch in on this one. He is the
> guru on Family law and community property issues, but
> here is my take:
>
> The nature of debt depends on the use of the funds.
> For example, if a man goes to Nevada, visits one of
> the "ranches", and pays with a credit card for which
> only he applied, the debt cannot be attributed to the
> wife. If the same guy stops on the way home from work
> to buy flowers for his wife, and is killed in a car
> wreck after purchasing the flowers with the same card,
> the wife likely would lose a suit making a community
> claim.
>
> was the 90k used for the community? You'd have to go
> far to show wifey used 90k on herself, but it may not
> be impossible.
>
> The second problem is the ownership of the house. Was
> it community?
>
> dennis

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In analyzing the situation, it is important to understand the following:
1. There is no such thing as community debt except in the
context of divorce where the court may assign the debt of one spouse to the
other in a divorce decree. This does not relieve the debtor spouse from
personal liability for the debt, it just gives them a right of reimbursement
from the spouse to whom the debt has been assigned by the court and a forum
to enforce that right. Unlike the BK court, the divorce court cannot erase
the individual liability of the debtor spouse. The third party creditor may
still look to the debtor spouse for satisfaction of the debt.
2. Spouses can have separate debt and joint debt just like
non spouses can. What make the spousal situation different is that the CP
is liable for the separate debt of either spouse. Separate property of one
spouse is never liable for the separate death of the other spouse, unless
that debt is incurred for necessaries of life. Medical expenses are the
most significant category of necessaries. See Family C. 900-912.
3. The issue you face in your case is whether the CP, QCP
or SP of the husband can be liable for the separate debt of the deceased
spouse. Spousal liability after death is covered by Probate Code
half
share of the CP and quasi CP is liable for the debts of the deceased spouse,
subject to all exemptions from money jmts, (b) the one half share of the CP,
QCP and the SP that the surviving spouse receives from the deceased Sp. is
liable for the debts of deceased Sp., with no exemptions.
I hope this helps.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green, Attorneys at Law
1010 E. Union Street Suite 206
Pasadena, CA 91106
Ph: (626) 449-8433
Fax: (626) 449-0565
pg23@earthlink.net
_____

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I think it's a community debt regardless of whose name it was in, unless they had a prenuptial agreement.
*******************************************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173
(818)509-1460 (fax)
e-mail: bklawr@bklaw.com
web: http://www.bklaw.com/
This Firm is a Congressionally Defined Debt Relief Agency

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I filed Chapter 7 papers for a couple. Among their debts was an unsecured
debt for $90K that the wife had taken out to finance her small business. I
have been told that the husband's name was not on the debt, even though they
had been married for many years when the wife incurred the debt. This debt
(to Wells Fargo) was accumulated over the space of several years, with the
last installment borrowed about a year ago. After I filed, but before the
341, the wife died.
The 341 didn't go well. The husband was in a state of shell shock over his
wife's death, and his English isn't the best. He made false statements
under oath. I told the trustee that my client was confused and
misunderstood the questions, but the trustee wants blood.
However, if the $90K debt was extinguished when the wife died, the remaining
debt is around $45K, still large, but not something that will end up badly
for my client. The focus of the battle is on a house that my client
transferred to his sons in 2003; the key issue being the adequacy of
consideration. Therefore, my question is: when the wife died, was her
$90,000 debt extinguished; or does it remain against the husband since they
filed jointly? That is, can I reasonably amend schedule F to delete the
debt to Wells Fargo?
Nicholas Gebelt
Law Offices of Nicholas Gebelt
15150 Hornell Street
Whittier, CA 90604
Phone: 562.777.9159
Cell: 213.804.2216
FAX: 562.946.1365
web: www.goodbye2debt.com
Email: ngebelt@goodbye2debt.com

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