You’re not a lawyer, and if you are a lawyer, I know you’re not my lawyer. Looking for advice on what you’d do in this situation and if you believe we do need a lawyer. Here’s the situation:
My wife was married previously and during her first marriage she and her then-husband took out a joint loan for a fairly large amount (roughly $30k, I believe). This was about 10 years ago.
Her and her ex have been paying on this 50/50 per their divorce agreement.
Aside from a few late payments here and there (by both sides) things have gone fairly smoothly. However, about a year ago we discovered that he’d changed the terms of the loan w/ the bank to lower the interest rate and the payment, and also extended the duration of the loan by a year or two. This lowered the payments from about $550 to around $260. However, we continued paying the original 50% payment of $225 and he only paid the difference of $35. This went on for several months before we discovered it by noticing the change in minimum payments on my wife’s credit report. Shame on us for not paying closer attention on a regular basis, but all of the loan management access is in his name and it’s been difficult for my wife to get full-access to the account because she is 2nd on the loan and not the primary account holder.
When confronted about the changes made to the loan without my wife’s knowledge or permission, her ex tried to lawyer-talk his way out of it (he’s an unemployed attorney) by claiming that he was able to make a separate deal for his half of the loan. We called bullshit on this and he caved and agreed to pay his full half of the new loan payment amount. We decided not to seek recourse for the six or so months when he’d been paying less than his share and just chalked it up as a learning experience.
Soon after that little bit of drama, he made a payment on the account but mistakenly used my wife’s account info which was saved by the loan holder to make it easier to facilitate phone payments. He also made a 2nd payment from his own account immediately after, so it seemed to be an honest mistake that he caught too late. It took a bit to get it all sorted out and in the end, we decided to close that checking account and open a fresh one to avoid this sort of accident occurring again. My wife also made each of her payments on the phone with a live person to avoid having her account info saved by the bank.
Flash forward to today, and we notice that he’d put through a payment using her account information again. The new account that we opened after the last bit of trouble. She called the bank that holds the loan and found out that her ex had made the payment and had used her account # to do so. Since this is from our new checking account, there’s no way he would have had this new account # and it must have been saved by the creditor (without permission) and they allowed him to make his payment using our checking account.
She called the bank, they are crediting the charge (though we’ll believe it when we see it) but now we’re wondering what to do now. She would like to file a police report for theft/fraud against him (and possibly also a restraining order due to his volatility and previous issues w/ him while they were married).
Is it worthwhile to talk to a lawyer about this? If so, what kind of attorney should we talk to? Is there anything a lawyer can even do to help this situation (I’m not sure there is)? Is filing a police report a good course of action?
But you should also recognize that in addition to the bad acts of your wife’s ex, you also have the bad acts of the bank (1) renegotiating the terms of the loan without the consent of all of the parties and (2) the bank’s malfeasance/negligence in processing debits from non-authorized parties.
As a joint borrower, your wife is jointly and severally liable for the entire amount of the loan. However, if the bank is going to allow one borrower unilaterally to alter the terms of the loan without notice to the second borrower, the bank’s ability to assert J&SL against your wife may be impaired.
That, plus the bank’s connivance in letting your wife’s ex’s wrongfully authorize debits on her sole account may give you and an attorney some leverage in negotiating a favorable settlement. Perhaps in the face of all this, the bank may be inclined to split the remaining balance down the middle with separate notes for the two of them. (The bank would not normally be inclined to do this, but they have fucked up a couple times so far, and not in altogether negligible ways.)
What she said. ^^^ It sounds like the bank is culpable for a couple of highly-questionable acts.
Is it possible for you and your wife to take out a loan in your names, Bob, and pay off your wife’s half of the old loan and get her name and account information off of it?
Thanks for your reply, that’s some great info and advice. You’re exactly right that the bank has been behaving badly here as well.
The only way for that to work is if he’s able to do the same, and there’s just no chance of that happening. He’s a licensed attorney but can’t hold down a job. Most recently he’d been working at a big box store until he was fired from there. Not sure where (or if) he’s working now.
How much of a loan are we talking about here? I think your goal here is to get your wife (and your) finances separated from this wanker’s, not to punish him legally. How about you pay off the loan completely, then sue him for his half, since he has egregiously breached the terms of the original agreement?
Hm, that’s an interesting idea. The balance is close to $10k and I don’t know how easy it would be for us to come up with that. Plus, I have very little faith that we’d ever get a dime out of him. This is something to consider though.
Yeah, I was thinking after I posted that taking him to court to sue for his half would probably take a long time and a lot of money; the upside would be that your wife would be financially separated from this guy, and that might be worth a lot to both of you - anything you get back from him might be gravy. This might be interesting enough for Judge Judy’s show.
As far as I can see from what you’ve posted, this guy is going to keep screwing around, and the bank, while not completely in the right, does have your wife on record as one of the loan-holders, and they do need to have her information because of that. Maybe you do need to see a lawyer to make her ex understand that he can’t make payments out of her account.
Something is wrong here. A 30k loan @ 18% would have payments of $541 a month and would be paid off in 10 years. It would have 34.9k of interest, which is more than the original loan amount.
Wouldn’t it have made sense to pay off half to get the ex to agree to refinance the loan and get your wife’s name off it, and file a modification to the divorce agreement reflecting this?
When a married couple borrows jointly and then divorce, the bank doesn’t give a shit. The new exes are each jointly and severally liable for the full amount of the loan. The divorce court can adjust obligations between the two former spouses, but it will not allow the divorce to spill over and impair the expectations of non-parties to the marriage.
So, in general, you’re going to have a very tough row to hoe if you want the bank to release the gainfully employed ex-wife loose and leave the chronically unemployed ex-husband as the sole borrower. Even if the ex-wife ponies up half, because the bank knows she responsible for all of it. (If the ex-wife had to pay the entire amount of the loan, she could go after the ex-husband for his share. But the law rests the onus of collecting contributions on the co-borrowers, not the lender.)
But, as I noted above, the bank has acted in such a way that makes continuing application of joint and several liability problematic: namely, they have renegotiated the terms of the loan with only one of the two parties. The icing on the cake is that they have been at least negligent by allowing unauthorized debits on the ex-wife’s sole account. This makes the bank’s position somewhat dicier and thus, perhaps more congenial to splitting the loan.
In the meantime, can your wife go old school and mail a check or money order to the bank for her loan payments? That way there is no account number from phone or online transactions to be saved. Then call the bank and tell them you do not authorize any phone or online payments using your account numbers.
If you can get the loan split that’d obviously be great. The other option of having you and your wife take out a loan, pay off the entire remainder of the loan in question and then try to get the ex-husband to pay you back (I’m assuming by getting a legal judgment against him) is probably not the greatest option.
If you just keep the current loan going, is there any way your wife can pay half without transmitting any banking information to the lender? It seems like to me the big problem here isn’t so much the loan, but the ex who has recently taken a turn for the worse in his behavior. If you could just go back to paying half of the loan payment each month but in a way that the lender wouldn’t get your personal banking information, that could solve the problem I would think.
I don’t know how it would work if the bank is a bank without a physical presence, or a bank located in a distant place. But I know that loans I’ve had at local banks with physical presence, I could pretty much make any type of payment by going in and talking to a teller (including paying cash.)
If this isn’t a lender where you have the option of going into their physical location, you might see if they would allow you to mail a coupon payment in and pay via money order. A USPS money order will only cost around $1.50 each month for the amount in question (you can get money orders from banks too, although the last time I did that a $500 money order from my local bank I’ve banked at for years was $5, compared to $1.50 or $1.95 or something at the post office.)
I’d also ask to talk to a bank supervisor, and find out if there have been “signatures” in order to do this hinky stuff.
The renegotiation of the loan should have had a signature.
The hanky-panky transactions from your wife’s checking account needed a signature card, too.
I bet the guy is a passable forger.
And if he has been signing her name to bank documents, he needs to go to jail, go directly to jail, do not pass GO, and most definitely do not collect $200! Call the cops, ask for a fraud detective.
~VOW
I think that I’d change banks, not just accounts. Yeah, the ex is at fault, but if the bank has done this not once but twice, then the bank is either unforgivably sloppy about this sort of thing or they are outright colluding with the ex.
And I would definitely get a lawyer, it will probably be much cheaper to pay a lawyer than to pay for any mistakes that your wife might make.
I agree with Lynn on both points. Change banks and get a lawyer. Maybe the bank is sloppy; maybe they’re willing to do whatever they can to ensure they get paid on the mortgage; whatever. Close the accounts, go to a new bank, open an account there just for the payments on the mortgage, and put the money into that account as needed from your regular accounts.
And send a letter to the bank manager, cc. the bank superintendent (or whatever the state official is in your state who is responsible for regulating banks) and say that the reason you closed the account is because the bank twice made unauthorised payments from the account to benefit the bank.
And talk to a lawyer about options to end this situation.
And, as a final note: this is a classic example of why people should get a lawyer, even for amicable separations. Lawyers have the experience and checklists to deal with all the issues which may arise. I realise that’s too late for your wife, but it bears repeating, considering the number of threads we’ve had on the Dope that raise issues that have resulted from a couple doing a “do-it-yourself” split, and issues arising some years later.
Do they even need an account for her to pay on the loan? As long as the payments are coming in on time (by money order or postal order or cash or whatever), couldn’t she close those accounts and not even open another one (as far as the loan bank is concerned)?
My second concern about this would be that if she closed both accounts and didn’t open another one, if they tried to put another payment through on a closed account on her ex’s prompting, would they be able to ding her for insufficient fund penalties or anything like that?
It’s not clear whether the wife’s checking account (the old and/or the new) is at the lending bank, or another one entirely. Either way, if the wife enters her account information (when making the loan payment), then the lending bank has her information and can debit her account, no matter where it is. So simply changing banks won’t do any good.
Of course, if her checking account IS at the same bank as the lender, then I’d move it just because they’ve proven themselves incompetent or dishonest.
On a lot of online payment sites, you can associate a number of payment methods, and you have to select which one to use when you make a payment. It’s quite possible that the ex is accidentally (or “accidentally”) checking the wrong radio button when making his own payment. Hell, I’ve done that myself via Paypal a couple of times.
The way to avoid that is obviously for the wife to make payments via some other method. I personally prefer online payments in general because they’re not subject to the vagaries of the postal service or the bank’s mailroom, but this is one case where that is definitely the best choice (and she needs to make damn sure the lender removes her account info from the loan - since you say they saved this without permission, that may mandate making another checking account change).
I’m rather stunned at the bank making the term / interest rate change unilaterally. With her as co-borrower, you’d think they’d need her signature as well. That situation - especially with the ex not notifying her of the change, and deliberately paying only the 35 dollars a month - smacks of deliberate fraud. If he’d truly made a new deal for only his half of the loan (hah), then he should have been paying half of the payment on that new figure.
This is an area where her divorce lawyer didn’t serve her well - he should have insisted that debt be split somehow. Either by paying it off of marital assets (if any - the unemployed ex suggests there wasn’t a lot there), or by each party separately taking out a loan for half the amount.
Uh, when you refinance a loan the original loan is paid off. How would refinancing “impair any expectations of non-parties”.
When a debt is paid off, that’s it. The lender doesn’t give two shits how or why it was paid off.
What I said was “Wouldn’t it have made sense to pay off half to get the ex to agree to refinance the loan and get your wife’s name off it, and file a modification to the divorce agreement reflecting this?” with supporting math.
Let’s say the loan had a principal balance of 15K. Ex-wife has 7.5K. That makes the new principal balance 7.5K. Husband takes out a new loan of 7.5K in his name only, which he uses along with ex-wife’s 7.5K to pay off the first loan in full. Now he is the only one with a loan, post divorce, in his name only.
And as I said, Something is wrong here. A 30k loan @ 18% would have payments of $541 a month and would be paid off in 10 years. It would have 34.9k of interest, which is more than the original loan amount. Anything other than a loan shark would be cheaper than this loan. Paying 34.9k interest over ten years is insane. This former couple is paying more than double what they borrowed, with nothing to show for it. Depending on the new interest rate, the ex-wife paying off the principal of this loan herself with a much lower loan rate could result in her paying less than she would have by splitting the old loan with her ex.
The the OP what exactly does your statement below mean? I’m not clear as to your statement here. If they are both jointly in the loan as borrowers what exactly does her being “second” on this loan mean, and “not the primary account holder”.
