Ex wife's debt charged off...
 

And I'm stuck paying 100% of the taxes??

A little background...2nd wife, who is currently incarcerated for arson and attempted murder for the house fire she set in 2007. When we divorced, she wanted to keep the car since it was hers. I agreed, and she was supposed to have had a new loan so my name was off of it...she didn't. After the divorce, she let the finance company come and take the car. I had sent the company a copy of the decree, and all was well...I thought.

This past spring, I started getting phone calls, because they were unable to locate my ex. I told them that she was currently incarcerated, and that they would have to contact her through her family, not me.

They just sent me a letter informing me that my name was still on the loan, and that they charged off the debt, informed the IRS, and that I am liable for the taxes on about $8500, since it's now considered income.

As much as I would love to fight this in court, and have it all go back to her, she's in jail and has no way to pay it, or my attorney fees.

I'm now screwed and have to pay the taxes, or lose my ass on lawyer bills that will go unpaid by her.

I'm not a happy camper...At least the crazy woman is in jail in another state, and has no idea of exactly where I live.

Dang. Sorry man. Is that going to send your credit to the crapper?

Can you hire someone to steal her kidneys and sell them on the black market after release from the hoosegow? :)

Yup. I worked so hard to pay off the debt that I kept after marrying her, and now this. I'm putting a call into a buddy of mine that is an attorney specializing in things like this. Maybe he might be able to help out and the dent in my credit report be less than what it could be.

Sometimes I wish I could...but she's so medicated in the slammer that I doubt that she's a viable candidate for organ donation.

Man, this is tough to read.:( Everything that you've written on this forum leads me to believe that you are a good, solid guy that doesn't deserve crap like this. Best of luck with it.:)

When I read or hear things like this, I realize just how lucky I am. I had no idea what I was doing when I was looking for a wife, so I didn't get a good one because I was smart. I got a good one because I was LUCKY. We've been married almost 39 years and she's the only wife I ever had. I am definitely LUCKY.

Hang tough JP!:)

I think you need to look closely at the tax forms or speak to a tax advisor - I can't see how you need to pay tax on something that you can prove that you have had no benefit from. This isn't reasonable. Let the tax man chase the convict.

At least you're not being stiffed for the amount due on the loan as well.

Here in the US, a Charge Off is considered income under tax laws, and taxes have to be paid on income.

Howdy,

My bad for not carefully reading your thread. Sorry. EX-Wife should have clued me in. Too much cold medicine I guess.

Does the creditor have both of you on the loan documents? If so, the divorce decree just orders one to pay it off, unless the creditor was part of the divorce proceedings. If the creditor wrote off the debt completely, meaning you never owe them a penny, then you might owe taxes. The first thing you will get is a 1099-C from the creditor.

After a debt is charged off as a "bad debt", the collection process still moves on. It is just a mechanism for mostly revolving credit. What ends up on the credit report is a R-9 (for revolving); or I-9 (for install loans), et cet. Generally, once the creditor determines you went 8 or 9 billing cycles "deliquent", they generally have to write the debt off as "bad". So, did the creditor really write off the debt as a total loss ? The amount written off needs to be $600 or more, unless the law has changed. If you get a 1099-C, then there used to be an IRS form where you answered a few questions to determine if you owed the money or not. So, I would just wait until I got a 1099-C. Again, sorry for my super poor job of reading your thread.

Look into the tax laws...like above post said. you might be clean

Sorry you have to go through this. The time and grief to document is unfair, but it doesn't sound to me like you're really on the hook for the taxes. Good luck!

I would check with a Lawyer as well. I t would seem to me:
1. you have the divorce decree which spell out who got what
2. SHE let the car go back.
3.SHE never fully implimented the agreement for divorce IE: car loan in her name .

IMHO you would be in the clear. My wife went through this type of thing from her 1st marriage. 1st husband had business in NYC,sold it for 3 Million, moved out of country. The IRS was very persistant trying to get money from us. It took a couple of years but after the copies of divorce with the dates highlighted, and letters back and forth between lawyers they wrote it off.

PS he is still out of the country.

Good Luck with it.

I'm not an attorney, but it's obvious to me that you should be questioning your divorce attorney that handled your divorce about this developing situation.

Some observations after reading your story:

First of all, the divorce decree (i would think) spelled out; A) separation of assets, and B) the end date that you had any assets (property) jointly.

The divorce decree would have to include this separation of properties (assets). If not - I would think it's your divorce attorney's fault/liability for not including the unpaid for vehicle in the inventory of assets, and it's separation, as presented to the divorce court.

To me, it sounds like the IRS/finance company is either looking to you as fall-guy, and buffaloing you into paying, or, the IRS/finance company has a valid claim against you, because of your attorney's shoddy divorce settlement preparation. I think your guy/gal that handled your divorce may have dropped the ball. If so, they need to fix it.

I hope this might help your insight of timeline/perspective on the divorce proceedings. Take care.

If the loan had legally remained your liability my suspicion is the loaning company would have been seriously after you for the whole due balance. I wonder if some statute of limitations stopped them from pursuing you. Perhaps they let too much time go by after the car was returned and they spent the time unwisely dealing with her.

Something does not quite smell right. She is liable for the taxes as she is the benificiary of the payout. Or at least far more so than you. Also since the car was returned to the lender did this in anyway effect the outstanding balance? If she got the car in the written terms of the final settlement I suspect it is a given she got the bill as it is part and parcel of the car.

If this is the case I suppose it is a toss up on if the loaning companies signature of yours is stronger from a legal perspective than the divorce orders.

Sounds like the legal separation or whatever was not specific enough. Although if she commited to assuming the whole debt on it and did not follow through might get you a shot at her assets. Unfortunatly she probably has none in this case.

The thing to remember overall is in almost any given situation it can usually always be worse. I suspect unless you draw bad tax people they might let it slide by. They have some flexiability in their system. Even if they do not admit it. This issue is cloudy enough for that.

You also seem to still be a little concerned about her. Ask the institution to notify you if she is released if you supect she may become a more direct problem for you at some point. It is usually not very hard to locate someones address . In my opinion she could find out where you live if she wanted to.

I need to clarify, as I wrote the original post prior to having coffee poured down my throat in a dosage that brought me to a proper communicating level...It was repossessed, according to their information, 3 days prior to the final decree being date stamped. Neither my attorney, nor I, knew about this until well after the fact, and I was under the impression from the lender, that my decree kept me from being liable for the loan.

Since I have gone on in my life, remarried, and have a new and better life than before, I do not want to have any dealings with this nutjob that may possibly tip her off as to my current location...that means that I don't want to go to court, file papers, or have any contact with her or her representing counsel in any way shape or form, because I don't want any mistakes that might let her or her family know where I reside.

I'm thinking that it will be better to swallow whatever tax liability there may be and get it over with, than to put my family and myself in danger.