Debts In A Divorce Decree

QUESTION: I financed a car with my ex-wife. The divorce decree states that the vehicle and the debt for it are hers.

She has not been paying on the auto loan, and it is hurting my credit. Do I have any legal recourse?

ANSWER: From a credit/debt rights perspective: Notifying the lender and/or the credit bureaus that your ex spouse was given the car and the car note does NOT relieve you from the liability. Family courts and divorce-court judges cannot force the bank (not a party in the divorce lawsuit) to agree to drop you as liable on the car note. Unfortunately, most divorce attorneys do not go into that sort of detail with their clients.

The only way you can save your credit is by making the payments yourself or encouraging your ex-wife to sell the car. If you make the payments yourself, you will probably have recourse to go back to family court and demand that your ex-wife reimburse you. If you convince your ex-wife to sell the car, any deficiency between the amount owed less the amount recovered through the sale is still your liability.

I would strongly recommend you do everything in your capacity to avoid the vehicle being repossessed. From a credit/debt perspective, a repo is even worse than a late payment or two.

On another note: if the vehicle does get repossessed, you should anticipate getting notice from the lender before the car is sold. That notice is required by Texas law and you should allow a consumer rights attorney to have a look at it to determine that your rights have not been violated. The Texas Finance Code has some terrific relief (damages) for consumers when that letter following repossession is defective.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.


Statute of Limitations On Unsecured Debts

QUESTION: I understand there is a statue of limitation of 4 years to collect unsecure debt (say, credit card debt). The creditor sold the debt to a collection agency at the end of the 4th year of the debt. My question is would the clock reset on this debt account? I meant a 4 years statue of limitation starts all over again with the new collection agency? what if this collection agency now sold the debt to the second collection agency after number of years unsuccessfully to collect, and the circle repeats itself. What rights as a consumer of unsecure debt has to get this old debt off the record for good?

ANSWER: It sounds like your question relates to credit reporting more than potential lawsuits to collect the debt.
The clock for the statute of limitations on debt starts at the date of default. (Some creditors like to argue the clock starts from the date of chargeoff – -180 days after default.) Unless YOU make a payment, nothing else will restart that clock.
The statute of limitations to collect the debt in court is 4 years.
The amount of time that the debt will appear on your credit report is 7 years from the date of default. It makes no difference how many times the debt was bought and sold, it is still seven years. If you make a payment to any debt collector or debt buyer along the way, then the clock starts all over again.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.


Getting Sued Over A Debt Already Paid

QUESTION: A collection agency says they’re going to sue me over a debt I already paid, I don’t know what to do.

I have a few emails of paid in full, but a couple of the companies didn’t send me anything, and when I tried to call them it says it’s no longer a working number.

ANSWER: First of all, I would suggest that you pull a copy of your credit bureau reports. You may obtain a free copy through www. It is the only website that the Federal Trade Commission has approved of for a free credit report. You might find useful information on that website. Also, do you have old bank statements or cancelled checks to prove you paid?

If a third party debt collector is threatening to sue you on a debt that has been paid (whether you can prove it right now, OR NOT) then it seems your rights have been violated. I would suggest you contact a consumer rights attorney who has experience going after abusive debt collectors. They will probably want to look up this debt collector that is threatening to sue you. Specifically, they will want to see if this debt buyer is a common litigator; and also, they will want to find out if this debt collector has a surety bond on file with the Texas Secretary of State. If they do not, then this whole thing sounds like a scam- an illegal scam.

Keep in mind that the federal Fair Debt Collection Practices Act allows you to collect a statutory award, other damages, as well as your attorney fees. That is the reason why many consumer rights attorneys do not charge clients up front for their time. They can get paid for by the defendants. I strongly suggest you get your payment history together and call a consumer rights attorney licensed in Texas.

This information is provided for educational purposes only. There is no attorney-client relationship with Karni Law Firm until a contract is signed by the attorney and the client.


Your Tax Refund and Unsecure Debt

Many people get very excited this time of year.   It is the time of year to look forward to a return of the money we pay in taxes throughout the year.  Depending on your tax withholdings, this could be a lot of money.  Don’t fall prey to paying off your unsecured debt.  The debt collectors that you hear from frequently will begin to mention that you should be getting a tax return and how you should use it to pay THEM off. Make sure you know what you are doing. That statute of limitations for a lawsuit to collect most types of unsecured debt in Texas is 4 years from the date of last payment.  Keep this in mind when talking to these collectors.  If the debt they are trying to collect is more than 4 years old, you risk starting that 4 year clock all over again.  By making a payment, you are renewing the debt, giving them permission to commence full fledged collection on that account.  Be smart with your money. Just because you are coming into some money does not mean you need to run off and pay certain debts. Make sure that you legitimately owe the debt and that the party collecting the debt is actually entitled to payments before you turn over your money.

Another thing to keep your ears open for are garnishment threats.  You may get a collection call where you are being told that if you don’t voluntarily make a payment on your delinquent payday loan or credit card account, that your Federal tax return will be garnished or seized.  NOT TRUE.  That sort of threat is illegal.  If your consumer rights have been violated, you should contact a consumer attorney to discuss it.  You can find a consumer advocate in your geographical area by going to and clicking the “find a lawyer” tab.

This blog covers consumer rights as they relate to Texas State law. If you reside outside of the State of Texas, you should consult with a local attorney.