Expert: Regan Shinski - 2/17/2011

Question
QUESTION: Dear Mr. Regan
I have question on general law knowledges   because  I am foreigner and all legal matters a bit muddied for me.
So the  story is , I   live in AZ  about 8 years.    My husband and I had TRUST. My husband passed away few months ago.   Before,a couple years ago he borrow car loan from bank solely  on his name , (he bought car when I was out of the country, other than at I would not let him buy this car).   Other assets  covered by Trust.   After his passing, I have to deal with a lots of  the credit card debts and equity loans, and funeral costs.  Those debts were in Joint accounts, and I have to worry first where my name on.   
The car and car loan  were  really brick on my neck, so I went bank to ask what should I do if I do not need this car anymore  and it is burden for me to keep paying?   Manager of the Bank told that I have 2 options:
1- I can try to sell this car myself, but first I need to change his name to main , and pay them balance.
2 -Surrender it.   Even he paid  2 years over  10000 already, it was a  basically loss.  The balance  was another $18000 left, Which I did not really planned to pay, because I don’t need that car in the first place.   I ask if I surrender the car, and the  bank  will sell it, what if bank will not recover all amount, then what?
She told me that I probably will get some letters  from Bank about paying difference, but as soon it was on his name I am not responsible, so she advised me to ignore letters, by her words it seems like the bank has to go with loss like  me.    That was my conversation with bank manger in AZ.
So I surrendered car right after our conversation.   Then  I had few letters from Alabama  that bank sold car for 9,000 something, and I owe them 9000 something more.  I ignored them as manager of very same bank advised me.    But now,   after few month I started to get calls from collection agency, obviously  bank sold car loan debt.
So I completely confused, Do I liable for my husbands debt or not,
Do they have grounds?   What the AZ law says about, and what is my action, and what possible action they can do???
My husband paid 2 years on time. It is not really my fault that car market plummeted  and after 2 years it dropped  2/3 of car value and bank sold the car so chip,  or my husband passed away.  But I really do not have  anything to do with that bank???
Sincerely
L.A

ANSWER: Hello:

You live in a community property state.  This means that all debts incurred during the marriage are owned equally, even if the paper is only in his name.  So... if he bought the car while you were married, you could very well be deemed to owe the debt.  I'm a little confused about what you were saying about the trust.  Are you assets or this debt in the trust's name?  This could change things if it does.

You could challenge the issue of liability based on the fact that you were out of the country when the debt was incurred but that could be a tough sell.  However, you may want to look into that.  Are you still living in Arizona?  Your current residence may play a part in the liability - or at least their ability to collect on it.

Assuming you are liable what will happen is they will continue to try and collect on the debt.  What they do or how far they push really depends on them.  They could sue you and get a judgment, they may let it go.  To stop the calls, you can send them a letter asking for debt validation and state that you want all future calls to be in writing.  That should at least stop the collection calls.

Good luck, I hope this helps,
Regan

REPAIR YOUR CREDIT - DELETE BAD INFORMATION - www.ficofighter.com

---------- FOLLOW-UP ----------

QUESTION: dear Mr. Regan
it is from Your answer:   ”I'm a little confused about what you were saying about the trust.  Are you assets or this debt in the trust's name?  This could change things if it does.“    
Could you clarify how it changes  things ??
All assets in the (our  last  name) Family Living Trust,   it is not my husbands estate or my estate,..  
But car loan was not in the  Trust, because, it was not paid and title  was held by bank. That the only item where my husbands name is solely on.   And one more thing, we live in  community property, but that car was not necessity for family, I did not buy it, I was on the trip, and I never   drove it, it was entirely for his fun, or use.
Also, how about  Compass Bank, who misled and misinformed me in the first place, what can I do about that?  I was not alone, I had friend who witnessed that  discussion with manager of Compass B.

Thanks  a lot for first answer
Best regards
L.A

Answer
Based on what you are telling me, it sounds like the debt could be assigned to you.  Sometimes through estate planning you can shield some assets and debts with a trust, but that is not the case here.  You are in a community property state, all debts and assets obtained during the marriage are jointly owned.  It doesn't matter how the vehicle was used.

I also think it is a weak argument on the Compass Bank issue.  However, you may want to pursue it.  I think the bottom line is that their statement will not override the state law but you may be able to pressure them into dropping the debt.  They may not want the hassle.

I'm sorry, I know you are in a tough spot and I really wish I had better news and options for you.

Regan