Last week, the US Bankruptcy Court in the Western District of Kentucky ruled that a Chapter 7 debtor’s credit card debt was not dischargeable because the debtor used a card that should have been closed. The debtor and the plaintiff divorced in 2003 and as a part of the divorce, the parties agreed to pay their own credit card debt as well as hold each other harmless in the event of default.
The husband and wife had a joint Fleet Visa which was to be paid by the husband. He paid it in April of 2003. The debtor/wife remarried in December of that year and she changed her name. That marriage only lasted a year, but the wife again married and again changed her name.
In 2004, Fleet was bought by Bank of America and issued a new credit card on what was formerly the Fleet Visa account. The debtor used the card, and when the bills arrived, the bills were addressed to her former ex-husband and the debtor using the name she had while married to him. She never notified the bank she was divorced or that her ex-husband’s name should not be on the card.
In 2006, after some business problems and an illness, the debtor filed bankruptcy. The husband sued claiming that the debt was not dischargeable on the basis of fraud. He argued that the debtor knew that she was using a card that was in both their names.
Debtor claimed that she did not know that the husband’s name was still on the account – and that because she had so many other bills at the time, she had no idea it was a joint account. However, this explanation did not make sense since the husband’s name was on the card, and on the bill, and the bills were in a name she used two marriages ago. She also had to reactivate the account, and thus had to have known at that time it was a joint account – as well as in her former name. Even “[i]t was not done knowingly,” the court wrote, “it certainly was done with gross recklessness.”
Because debtor did not take some very simple steps to change the holder of the account, the debt is non-dischargeable, and because of the hold-harmless language of the settlement agreement, she must pay it. Based on these facts, shouldn’t the debtor have known better?
A Thanksgiving Message for My Clients and others…
I imagine it is very hard to think of Thanksgiving when foreclosures in Massachusetts continue to rise. I think I am safe saying that it’s going to be hard for me to think of it, since I’ll be likely thinking about the work I am not getting done while I am visiting family. This is also compounded by the fact that my mind is still reeling from a statistic I heard this afternoon from a prominent creditor’s rights attorney.
At a brown-bag lunch seminar on foreclosures, the attorney told the crowd of debtor and creditor attorneys that in 2008 it is expected that 2 million mortgages will adjust up. In other words, the New Year is not going to bring an end to the housing mess that was brought on by the irrational exuberance (to steal a phrase) in housing. Things are not going to get easier for the people I represent.
Even though people were wishing each other Happy Thanksgiving, many were in a mad rush to get everything done they needed to get done in anticipation of the holiday. As I was sitting at my desk this evening, trying to clean it off before tomorrow – when I know I’ll have more work that I know I need to get done before, like so very many, I hit the road – I received a phone call.
It was a relative of a client who I met last week to discuss options. This client was very nervous – as many are – when they come to meet me. No one really plans on seeing a bankruptcy attorney in their life. You’re never going to open a high school yearbook and under a class picture it reads: “Future plans: I’m going to file bankruptcy!”
At some point during the meeting, his nervousness subsided, and he started to relax and tell me his side of things.
I spent about and hour and a half learning about his history, how the debt grew and grew. And we discussed what we could do to get through bankruptcy; to let him get on with his life. As the meeting went on, he began to smile more. When it was over and as I was walking him out, I asked him if he felt better than he did when he came in. He admitted that he did. I smiled back and said simply “that’s part of my job.” We parted ways, and shortly after that, I headed home.
The relative called to tell me that he died unexpectedly over the weekend. I was taken-aback bit. No, more accurately, I was stunned. The relative had called, knowing that he had come to see me, and just wanted to know if there was anything they needed to know or do. I told them no, not now, but that they could call if they ever had any questions or concerns and perhaps I could help. Then, after I offered my condolences again, there was a long awkward pause.
All day I have been wishing people a “Happy Thanksgiving.” All day I have been either talking to people who deal with people in financial crisis, learning about how to help people in a financial crisis, or talking to people in financial crisis. Yet, during that pause, all I could do was think ‘how can I wish this person a Happy Thanksgiving?’ There was no easy answer to the question, and honestly, I am not sure what I said.
Some of us will have a Happy Thanksgiving, and some of us will not. And the more I think of it, some of them are my clients. It will not always be that way. We will all, at some point, be forced to face loss and pain. I can tell you that some holidays will be happier than others. This is life, and there’s nothing that this bankruptcy lawyer can do to change that. But as we head into Thursday, I urge you all to look around you and be thankful for what you do have.
Chances are, you do have at least one thing to be thankful for: a tomorrow.
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