Are we not hosed?
April 2, 2012 8:39 PM Subscribe
We're trying to understand what we can do about some financial hardships my fiance incurred from her previous relationship...
Let's say they agree that he owes her around $5,000 for rent and shared expenses when they were living together. But so far, he's payed her back next to no part of that. If she has records of the debt I imagine she could take him to small claims court, but how does that work? If a judge decides he owes her the money, but he's still broke, what happens then?
Also there's the added unfortunate situation that she cosigned for a student loan for him, to the tune of about $5,000 as well. All of my searches indicate that we're pretty much hosed on that one. The only way to get out of being a cosigner is if the person is doing a great job of paying it off and that seems to be the opposite of what's happening. But I figured I would post this and see if anyone has any practical advice. If she pays off the debt, can she still legally claim that he owes her that money?
Also there's the added unfortunate situation that she cosigned for a student loan for him, to the tune of about $5,000 as well. All of my searches indicate that we're pretty much hosed on that one. The only way to get out of being a cosigner is if the person is doing a great job of paying it off and that seems to be the opposite of what's happening. But I figured I would post this and see if anyone has any practical advice. If she pays off the debt, can she still legally claim that he owes her that money?
Response by poster: Also considering a mediator and/or talking to a lawyer, anyone have advice as to the social engineering of a situation like this? How to politely encourage the guy to take this seriously..?
posted by garethspor at 8:43 PM on April 2, 2012
posted by garethspor at 8:43 PM on April 2, 2012
When you approach any legal situation, you need to perform a cost-benefit analysis given the time and energy needed to pursue the claim in addition to the likelihood that you can collect the actual monetary judgment from the opposing party. Imagine how much time and energy you will need to prepare gathering evidence to argue the case, taking time off from work to attend a hearing or trial, and then convince the opposing party that she/he actually owes you the money.
You can take your fiancé's ex to small-claims court, argue the case, and perhaps win. He/She can then appeal to a jury trial, fail to make payment if there is a judgment in your favor, or drag the process as long as possible to drive you and your fiancé crazy. It happens all the time even in multi-million dollar lawsuits involving fortune 500 hundred companies.
What many plaintiff's forget is that it is the responsible of the charging party to collect the amount of the judgment from the opponent. You can be awarded $1 million in damages and the defendant could die, declare bankruptcy, move abroad, etc. Generally, people don't respond well to being involved in litigation. Especially if they are an ex.
I can surmise that there are perhaps some lingering issues between your fiancé and your ex. These issues may resurface and affect the relationship you have with your fiancé. If you cannot afford a lawyer to collect and litigate the debt, then consider the options:
(1) Mediation or negotiation: Tell your fiancé to call your ex or meet in person. He/She should make it clear that the relationship is over, and that it would be helpful to collect the outstanding debt. Offer a payment plan, or agree to settle the outstanding amount for less than the total amount of $5,000. If the ex doesn't budge, then propose mediation. Mediation fees can range from $500-$1,000 for a single session if you hire a private mediator. Sometimes local courts agree to mediate before the small claims session for free.
(2) Litigation: You can file a small claims lawsuit. Courts, in general, look unfavorably against plaintiffs that do not make an earnest effort to rectify a dispute prior to engaging in litigation. This should always be a last resort.
(3) Forget it and accept the loss: I'd recommend this route. Assuming you're employed, and not in desperate need of cash, I'd highly recommend you and your fiancé consider letting this go. I'd also ask your fiancé what the tacit motivations are for pursuing the debt after the fact when the relationship is over. Why did your fiancé allow his/her ex to accrue $5,000 in debt that he/she knew the ex would never repay. Is your fiancé looking for revenge or perhaps reconciling with the ex? In general, I'd keep exes in the past and move on with a clean slate. You're engaged. Focus on the positive aspects of your own relationship, eat the loss, focus on your upcoming wedding, and get on with your life. Your mind and well-being will thank you for it.
posted by syanora at 9:01 PM on April 2, 2012 [5 favorites]
You can take your fiancé's ex to small-claims court, argue the case, and perhaps win. He/She can then appeal to a jury trial, fail to make payment if there is a judgment in your favor, or drag the process as long as possible to drive you and your fiancé crazy. It happens all the time even in multi-million dollar lawsuits involving fortune 500 hundred companies.
What many plaintiff's forget is that it is the responsible of the charging party to collect the amount of the judgment from the opponent. You can be awarded $1 million in damages and the defendant could die, declare bankruptcy, move abroad, etc. Generally, people don't respond well to being involved in litigation. Especially if they are an ex.
I can surmise that there are perhaps some lingering issues between your fiancé and your ex. These issues may resurface and affect the relationship you have with your fiancé. If you cannot afford a lawyer to collect and litigate the debt, then consider the options:
(1) Mediation or negotiation: Tell your fiancé to call your ex or meet in person. He/She should make it clear that the relationship is over, and that it would be helpful to collect the outstanding debt. Offer a payment plan, or agree to settle the outstanding amount for less than the total amount of $5,000. If the ex doesn't budge, then propose mediation. Mediation fees can range from $500-$1,000 for a single session if you hire a private mediator. Sometimes local courts agree to mediate before the small claims session for free.
(2) Litigation: You can file a small claims lawsuit. Courts, in general, look unfavorably against plaintiffs that do not make an earnest effort to rectify a dispute prior to engaging in litigation. This should always be a last resort.
(3) Forget it and accept the loss: I'd recommend this route. Assuming you're employed, and not in desperate need of cash, I'd highly recommend you and your fiancé consider letting this go. I'd also ask your fiancé what the tacit motivations are for pursuing the debt after the fact when the relationship is over. Why did your fiancé allow his/her ex to accrue $5,000 in debt that he/she knew the ex would never repay. Is your fiancé looking for revenge or perhaps reconciling with the ex? In general, I'd keep exes in the past and move on with a clean slate. You're engaged. Focus on the positive aspects of your own relationship, eat the loss, focus on your upcoming wedding, and get on with your life. Your mind and well-being will thank you for it.
posted by syanora at 9:01 PM on April 2, 2012 [5 favorites]
You can take your fiancé's ex to small-claims court, argue the case, and perhaps win.
The Asker's fiance is the one who owes the money to the ex.
posted by drjimmy11 at 9:05 PM on April 2, 2012
The Asker's fiance is the one who owes the money to the ex.
posted by drjimmy11 at 9:05 PM on April 2, 2012
Response by poster: ^^^ Nope, the ex owes my fiance the money. I did not make that clear! Sorry...
posted by garethspor at 9:12 PM on April 2, 2012
posted by garethspor at 9:12 PM on April 2, 2012
Your fiancée (you are her fiancé; I'm guessing that's what threw off previous poster) should be more concerned about the cosigned loan, because that's more money that she could still be on the hook for. The first 5k can be written off mentally as gone, even though it would be tough, for all the reasons syanora mentions. IS her ex making payments on the student loan on time? I would not try to collect on the first 5k until that loan is totally paid off OR you are certain it will be.
posted by supercres at 9:32 PM on April 2, 2012
posted by supercres at 9:32 PM on April 2, 2012
Response by poster: Nobody's making any payments on the loan. The bank is calling my fiancée looking for money. I can ignore the first debt but I'm worried about the student loan. I'd rather not end up paying for it myself but it may come to that. In a perfect world we'd get him to pay back the money owed to her and use it to cancel out that debt...
posted by garethspor at 9:44 PM on April 2, 2012
posted by garethspor at 9:44 PM on April 2, 2012
Were the living expenses actually a loan? This is also a potential issue. The other person agreeing is usually not sufficient to go back and say that oh, by the way, this money that we spent last year was actually a loan that you're legally obligated to pay me back.
It sounds, most significantly, like he probably just plain *does not have this money*. His credit's getting hosed, too, for his failure to pay back the student loan, and no doubt he's also getting collection calls about it, and if he doesn't have the cash to make payments on that debt, chances are excellent that he doesn't have the cash to make payments to his ex, either.
It's unfortunate, but at a certain point, you can't collect from people who have very little money; the rules protect a certain amount so that they have enough to live on. The amount of time and effort (and money) that you can expend might turn out to be enormous compared to the amount of money you got, even if you successfully got a judgment against him. Even if you go so far as to get a garnishment, for example, there will be limits on how much they can take out of each paycheck. For $10k total, I don't think that I, personally, would try this unless I knew he was making good money from a job he was likely to keep for the foreseeable future. And even there, it'd be borderline. Absent that, I'd write off the living expenses and call the bank to see what can be worked out as far as a payment plan.
posted by gracedissolved at 10:46 PM on April 2, 2012 [1 favorite]
It sounds, most significantly, like he probably just plain *does not have this money*. His credit's getting hosed, too, for his failure to pay back the student loan, and no doubt he's also getting collection calls about it, and if he doesn't have the cash to make payments on that debt, chances are excellent that he doesn't have the cash to make payments to his ex, either.
It's unfortunate, but at a certain point, you can't collect from people who have very little money; the rules protect a certain amount so that they have enough to live on. The amount of time and effort (and money) that you can expend might turn out to be enormous compared to the amount of money you got, even if you successfully got a judgment against him. Even if you go so far as to get a garnishment, for example, there will be limits on how much they can take out of each paycheck. For $10k total, I don't think that I, personally, would try this unless I knew he was making good money from a job he was likely to keep for the foreseeable future. And even there, it'd be borderline. Absent that, I'd write off the living expenses and call the bank to see what can be worked out as far as a payment plan.
posted by gracedissolved at 10:46 PM on April 2, 2012 [1 favorite]
1. Has she made any payments whatsoever to the loan since inception? Can she file an affadavit and say that the signature was forged on the initial loan application then ask the court for relief ? see here Its just a thought - could be totally unreasonable.
2. Or, can she ask him for another form of immediate repayment and she (you) will offer to pay off the $5,000 in exchange for..... his vehicle....bike...camera...things you can sell now to reclaim his study cost. Sounds vile I know and depends on his care factor which leads me back to point 1.
posted by Under the Sea at 11:38 PM on April 2, 2012
2. Or, can she ask him for another form of immediate repayment and she (you) will offer to pay off the $5,000 in exchange for..... his vehicle....bike...camera...things you can sell now to reclaim his study cost. Sounds vile I know and depends on his care factor which leads me back to point 1.
posted by Under the Sea at 11:38 PM on April 2, 2012
IANAL. The Court can order wage garnishment to settle debts even for small claims, and depending on your jurisdiction, for the living expenses there might be a case to be made even if there was just an oral agreement.
But definitely your fiancee is deeply hosed in the matter of the cosigned loans. She's as responsible for the loan obligation as he is - that's what co-signing is, a guarantee that in the event the primary signer defaults, the lender can come back against the person with the assets/better credit who co-signed. (Some lenders will permit a co-signer release, but that's conditional on the primary signer's good repayment history, and it has to be initiated by the primary signer.)
(PSA: never co-sign for someone unless you're happily prepared to accept full responsibility for his or her debt, even if s/he totally betrays you or turns out to eat kittens or whatever. Because the lender doesn't give a crap whether you love each other - lender just wants to get paid, and the lender has already decided you're good for the money.)
posted by gingerest at 11:40 PM on April 2, 2012
But definitely your fiancee is deeply hosed in the matter of the cosigned loans. She's as responsible for the loan obligation as he is - that's what co-signing is, a guarantee that in the event the primary signer defaults, the lender can come back against the person with the assets/better credit who co-signed. (Some lenders will permit a co-signer release, but that's conditional on the primary signer's good repayment history, and it has to be initiated by the primary signer.)
(PSA: never co-sign for someone unless you're happily prepared to accept full responsibility for his or her debt, even if s/he totally betrays you or turns out to eat kittens or whatever. Because the lender doesn't give a crap whether you love each other - lender just wants to get paid, and the lender has already decided you're good for the money.)
posted by gingerest at 11:40 PM on April 2, 2012
Since I forgot to add, with regard to my prior comment: not a lawyer, not legal advice, just information gained as a fellow-traveler back when my ex put $10k of stuff onto my credit cards and then decided he didn't feel like being gainfully employed on a regular basis.
posted by gracedissolved at 12:03 AM on April 3, 2012
posted by gracedissolved at 12:03 AM on April 3, 2012
Ms. Vegetable's sister was in a similar situation - roommate took money designated for shared rent, took utility money, and booked it one day when my sister was at work. Tune of 4k, which my sister needed.
What happened:
My sister wrote the ex-roommate (certified, I think) letters asking for the money. Ex-r ignored them. Sister hired lawyer and took ex-r to small claims court in the county where this happened. Ex-r did not show. Sister got judgment against ex-r.
That was the easy part because my sister had copies of checks and other documentation. Does your partner have any documentation?
The hard part was actually getting the money. My mom went to the county where ex-r lived and filed the judgment against her so it would show up on her record. There was more paperwork when ex-r did not pay it. Eventually found out ex-r had a job. My mom went back to the county where that job was and filed for wage garnishment. Eventually (a year of garnishments, I think), my sister was paid back in full.
Nobody expected her to actually get the money back. My BIL (a lawyer) explicitly advised ber to forget the money and move on. It took a huge toll on my sister. Drama. Time. Emotional energy. More time. Took a toll on my mom, having to go deal with it over amd over. My sister needed the money, and it was her decision to try and get it.
If you don't need the money, I'd try mediation very hard. If you do, it's possible, but it is long and drawn out and not guaranteed.
Documentation is your friend. If you hire a lawyer, those fees can be added to the judgment. Judgments show up on credit checks; a person can't get a mortgage or any other type of loan until they're paid off. I think that's when it's most likely you'd get the money- when he applies for a loan in the future.
Getting the judgment is relatively easy. Getting the money is not.
And sorry, but you're out of luck on the cosigned loan.
posted by a robot made out of meat at 5:01 AM on April 3, 2012
What happened:
My sister wrote the ex-roommate (certified, I think) letters asking for the money. Ex-r ignored them. Sister hired lawyer and took ex-r to small claims court in the county where this happened. Ex-r did not show. Sister got judgment against ex-r.
That was the easy part because my sister had copies of checks and other documentation. Does your partner have any documentation?
The hard part was actually getting the money. My mom went to the county where ex-r lived and filed the judgment against her so it would show up on her record. There was more paperwork when ex-r did not pay it. Eventually found out ex-r had a job. My mom went back to the county where that job was and filed for wage garnishment. Eventually (a year of garnishments, I think), my sister was paid back in full.
Nobody expected her to actually get the money back. My BIL (a lawyer) explicitly advised ber to forget the money and move on. It took a huge toll on my sister. Drama. Time. Emotional energy. More time. Took a toll on my mom, having to go deal with it over amd over. My sister needed the money, and it was her decision to try and get it.
If you don't need the money, I'd try mediation very hard. If you do, it's possible, but it is long and drawn out and not guaranteed.
Documentation is your friend. If you hire a lawyer, those fees can be added to the judgment. Judgments show up on credit checks; a person can't get a mortgage or any other type of loan until they're paid off. I think that's when it's most likely you'd get the money- when he applies for a loan in the future.
Getting the judgment is relatively easy. Getting the money is not.
And sorry, but you're out of luck on the cosigned loan.
posted by a robot made out of meat at 5:01 AM on April 3, 2012
Consider this: the emotional and temporal toll that trying to collect all of this will take might be equal to getting a part time job for a year and devoting its income toward paying off the debt. It's not a "win" of any sort, but it might be easier.
(Well, it might be a win in that your fiancee won't have a defaulted loan on her credit report.)
There is a possibility that getting some kind of judgement, even if it never gets paid back, might be helpful in an income tax sort of way. You'd obviously have to get to a tax person and see, but she *might* be able to write off the $10,000 owed to her, and then if she ever gets paid back, just add those payments back onto her income in those years.
posted by gjc at 6:13 AM on April 3, 2012
(Well, it might be a win in that your fiancee won't have a defaulted loan on her credit report.)
There is a possibility that getting some kind of judgement, even if it never gets paid back, might be helpful in an income tax sort of way. You'd obviously have to get to a tax person and see, but she *might* be able to write off the $10,000 owed to her, and then if she ever gets paid back, just add those payments back onto her income in those years.
posted by gjc at 6:13 AM on April 3, 2012
At this point, you really need the advice of a lawyer. Even though people generally represent themselves in small claims court, legal advice helps them do it properly.
Let this also be a lesson: cosigning is almost always a bad decision. Luckily $5000 is not a crushing amount of debt.
posted by twblalock at 2:59 PM on April 3, 2012
Let this also be a lesson: cosigning is almost always a bad decision. Luckily $5000 is not a crushing amount of debt.
posted by twblalock at 2:59 PM on April 3, 2012
How to politely encourage the guy to take this seriously..?
It's relatively cheap to hire a lawyer to send a letter by registered mail to him about it. That might help. Maybe he would negotiate with you directly on it to pay a portion of it or provide some sort of items of value. OTOH, if he doesn't have any money to pay you or anything else of value, he might take it seriously without it helping you at all.
IIR you don't need a judgement for bad loans to put them on your tax return -- what you do need I don't recall offhand, but you don't need a tax person, it's all on the instructions for the forms or you can buy a book or some software. IIR he would take a tax hit.
You say "if she has records"... well, does she? If she doesn't, there might be something that could be done as far as convincing him to take it seriously, and have both of them sign some documents as to the existence of the debt (if that is legal to do at this point) and whatever would be needed to take it off on taxes -- but if it wasn't a debt in the first place, that's fraud. Right now he doesn't owe her for the student loan, she didn't lend him that money -- she took responsibility for paying it back.
OTOH, this might not be worth doing, if her income was high enough that this would cut down on taxes substantially she'd probably have better things to do with her time than try to get money from an ex who probably doesn't have any.
posted by yohko at 7:28 PM on April 3, 2012
It's relatively cheap to hire a lawyer to send a letter by registered mail to him about it. That might help. Maybe he would negotiate with you directly on it to pay a portion of it or provide some sort of items of value. OTOH, if he doesn't have any money to pay you or anything else of value, he might take it seriously without it helping you at all.
IIR you don't need a judgement for bad loans to put them on your tax return -- what you do need I don't recall offhand, but you don't need a tax person, it's all on the instructions for the forms or you can buy a book or some software. IIR he would take a tax hit.
You say "if she has records"... well, does she? If she doesn't, there might be something that could be done as far as convincing him to take it seriously, and have both of them sign some documents as to the existence of the debt (if that is legal to do at this point) and whatever would be needed to take it off on taxes -- but if it wasn't a debt in the first place, that's fraud. Right now he doesn't owe her for the student loan, she didn't lend him that money -- she took responsibility for paying it back.
OTOH, this might not be worth doing, if her income was high enough that this would cut down on taxes substantially she'd probably have better things to do with her time than try to get money from an ex who probably doesn't have any.
posted by yohko at 7:28 PM on April 3, 2012
IANAL. When lawyers advise you to write off these kind of debts its not because the chances of getting paid back are nil, but the effort involved in getting paid back is very likely to greatly exceed the value of the money concerned.
A lawyer I work with recommends finding a couple of really big guys to go the the debtors house to encourage them to repay in situations like this. Cheaper, might work, and even if it fails you can still have the satisfaction that the debtor is at least under some stress to pay up.
posted by bystander at 5:33 AM on April 5, 2012
A lawyer I work with recommends finding a couple of really big guys to go the the debtors house to encourage them to repay in situations like this. Cheaper, might work, and even if it fails you can still have the satisfaction that the debtor is at least under some stress to pay up.
posted by bystander at 5:33 AM on April 5, 2012
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posted by jayder at 8:40 PM on April 2, 2012