Is Wife's Separate Property Liable?

[FICO_800]

My husband had a large amount of unsecured business debt, all personally guaranteed and some simply on personal cards. The business (a small California C Corp) is still technically extant as a tax-paying entity but totally non-operational.

I totally depleted our marital assets in an effort to pay off the debt, but he still has approx 70K in unsecured debt. Payments over the last 2 years have only been made through use of a business line of credit (personally guaranteed by him only) which acts as an instant overdraft on his business account. As of this month there will be not sufficient space in overdraft to cover payments, and the default rate will kick in.

Our marital community is judgment proof, as is he personally.

1) what should I anticipate in terms of collection efforts?

2) Are my separate assets liable for his personal debt? I depend on income from these assets to support the family.

3) If not legally liable, can creditors lien them anyway--leaving me to challenge the liens in court?

4) Would his personal bankruptcy be necessary to protect my separate assets? If so, at what point in the collection process would it need to be declared to protect me? He has refused to declare bankruptcy thus far (mainly psychological reasons, as far as I can see), holding out for a "big project" that will come through "soon" and allow him to pay it off,

Thanks--community property cuts both ways--

 

[JohnMacek]

1) depends on what collection agency/attorney gets the account. once you a delinquent, the original creditor will try to collect from you for a few months, then it's off to the first in line of collection agencies. most will only call, but a few might sue you. If you get a "gung-ho" collection attorney, and he/she sees that you have the only assets, they may try to "pierce the corporate veil" (i'm assuming the debt was incurred in both your husbands name as well as the corp's name) and name you and you husband as individuals (if you are an officer of the corp). Be prepared, at a minimum, to receive a subpoena duces tecum, as well as for a deposition and/or written interrogatories.

2) possibly, that depends on a few factors. They will try to argue that they are community property and thus they have a right to his interest in them

3)they can only lien if they have a judgment. If they do, and you're not named as a defendant in the matter, they can't.

4) i think if he goes BK along w/ the corp, you wouldn't have anything to worry about. They will look into the household's assets in determining "income" and net worth. I would strongly recommend talking to an experienced bk attorney.