Legal Question in Credit and Debt Law in Maryland

Hello. I desperately need help from a MARYLAND attorney.

On May 21, 2010, I received a letter - (via standard US Mail delivery; i.e: received without signature) - from Discover credit card. Their threat is that I have until June 30 to square books with them, and the letter was my formal notice that Discover had placed my account in an "Attorney Placement Pending" scenario.

Would a MD attorney please tell me of my options and protections as they pertain to unsecured credit card debts?

My story; I live in a house that my wife owns in her name only, but was purchased after our marriage. Extraordinary details on the purchase at bottom.

The Discover Card balance stands at $8,365.83.

The balance was accrued/left to me in divorce 5-6 years ago. Unfortunately, as a young married in 1992, only my name was on the Discover card application...so the balance became "all mine" at divorce settlement, even tho I rang up only a small part.

For YEARS I paid Discover Card to the best to my ability---only the minimums, but almost always on time-- but they regularly jacked percentage rates thru the roof (to near 30%) and worse, their monthly penalty fees became so defiant and prohibitive, if you will, that every month it was one step up and one step back.

I literally treaded water with Discover for 3 years. The balance NEVER lowered. I, of course, called Discover multiple times asked for mercy on my percentage rate, but they essentially laughed at my requests.

In turn, I threw in the towel and stopped paying them. My hope was to work a Settlement with them for hopefully 50% of ther total balance, but they apparently did not sell off my account/their uncollected debt, and are sending me to an attorney for action.

Four or 5 months ago I had hoped to go Chapter 7 on the Discover card (as well as 2 other cards...all 3 totaling about 30K,) but a MD attorney told me in person that, under normal circumstances, I could have, BUT due to an event in in October 2009 --- when a rich friend gifted my new wife and I $52,000 to settle some debt of hers and to get into a new house --- that any Bankruptcy Trustee would say that receiving such a large sum of money would nullify my chances of seeking Chapter 7 relief.

I should note that 100% of my credit card debt was rung up between 5 and 18 years ago. I've lived "an all cash existence" for close to 5 years--- and my new wife is not attached to one cent of any of my debt. Not a penny.

In closing, 2 Questions for a Maryland atty on this board:

1/ How should I handle the Discover card Attorney Placement Pending letter; and secondly -- regarding the home which was purchased with monies from the 52K Gift, can a credit card company in which I have unsecured debt, come after a house which is in my wife's name, only, although it was purchased after we were married and with Gift Monies "from me"?

( sidebar: My credit score was detrimental to our loan quest, so the home had to be purchased soley in my wife's name)

Now, potentially dicey part...

When the 52K Gift was wired to us in Oct 09, it was wired to a Joint Account with BOTH, my wife and myself on it at M & T Bank.

Afterwards we would learn: Due to the loan equation of my wife's credit score (while not perfect but top shelf), yet having a sub-40K income AND no co-signer on the home loan, she would need a Gift (i.e: for a larger downpayment)...

- Therefore, by virtue of the home loan process in Maryland and some other ridiculous legal protocols, it was requisite for me, her husband, to create a new & totally separate bank acct WITHOUT my wife's name attached to it -- AND THEN transfer from the 52K Gift sittin in Joint Bank Acct the amount of our home purchase downpayment (30K) into it.

Next, I'd then write my own wife a check from this new account which did not include her name, thus making it a legal 'gift' from husband to wife. (aye yi yi... I know, totally nuts; but it worked, and it's 100% proper and legal)...

However, while the original 52K gift came from an angel trying to help us clean up some old money messes and start a new life together, the MD atty I saw 6 months ago said that... as he reads the law.... the credit card companies (bankruptcy trustees) would state: "You should've used that 52K to pay off your credit card debt--- not buy a house--- as such: "No to a Chapter 7."

All told, given this full background, MOST IMPORTANT: Can a credit card company (again: the cards = all unsecured debt) come after the house I reside in, owned by my new wife -- but which I theoretically Gifted her money to buy -- although my name is not on the home's ownership in any manner?

Let me be clear: Legally, on paper, the house belongs 100% to my wife.

Thank you very much for absorbing my story and for your time. Please advise here and leave your contact information. Many thanks.


Asked on 5/24/10, 11:33 am

2 Answers from Attorneys
Cedulie Laumann Arden Law Firm, LLC

Hello. Your question is quite detailed for an online post, but the short answer is that a creditor may try to set aside any transfer of property without consideration as a fraudulent conveyance. So although title is in someone else's name (your current wife), this is not the sole consideration. If the debt progresses to judgment in your name, it does not operate as a lien against property in your wife's name although again a creditor may attempt to set aside any transfer you made and go after the money or what was purchased with the money.

As far as the underlying debt goes, you may want to contact the creditors (perhaps through counsel) to negotiate a settlement. Particularly if this goes to the creditor's attorneys you may find the creditor willing to negotiate some kind of lump sum settlement.

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Answered on 5/26/10, 8:52 am
Phillip M. Cook Cook Legal Services, LLC

Are you still having problems related to the above question? If so, please let me know the current status. Otherwise, I recommend hiring a Maryland debtor's rights attorney to assist you.

Best of luck.******The above does not create an attorney-client relationship and is instead intended for informational purposes only.*******

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Answered on 8/22/10, 5:51 pm


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