In the Matter of JANET L. RODOCKER, Petitioner

HUDBCA No. 00-A-CH-AA17 Claim No.7-707150160B

 

DECISION and ORDER

Petitioner was notified by Due Process Notice that the Secretary of the U.S. Department of Housing and Urban Development (HUD) intended to seek administrative offset of any Federal payments due to Petitioner or to seek administrative wage garnishment of Petitioner's pay in satisfaction of a delinquent and legally enforceable debt allegedly owed to HUD. Administrative offset is authorized by 31 U.S.C. ? 3720A; administrative wage garnishment is authorized by 31 U.S.C. ? 3720D. The claimed debt has resulted from a defaulted loan that was insured against non-payment by the Secretary pursuant to Title I of the National Housing Act (12 U.S.C. ? 1703).

Petitioner has made a timely request for a hearing concerning the existence, amount or enforceability of the debt allegedly owed to HUD. The Administrative Judges of this Board have been designated to conduct a hearing to determine whether the debt allegedly owed to HUD is legally enforceable. 24 C.F.R. ? 20.4(b). As a result of Petitioner's request, referral of the debt for offset or issuance of a wage withholding order was temporarily stayed by the Board.

Discussion

31 U.S.C. ? 3720A and 31 U.S.C. ? 3720D provide Federal agencies with remedies for the collection of debts owed to the United States Government. The burden of proof is on the Government to prove the existence or amount of the alleged debt. 31 C.F.R. ? 285(f)(8)(i). The Secretary has filed a Statement with documentary evidence in support of her position that Petitioner is indebted to the Department in a specific amount.

Petitioner does not dispute the existence or amount of the debt incurred pursuant to a loan agreement insured by the Secretary under Title I of the National Housing Act, 12 U.S.C. ? 1703, or that the debt is delinquent. Rather, Petitioner asserts that the debt is not enforceable against her because, pursuant to a divorce decree, she has fulfilled her repayment obligation on the note and her former husband is responsible for the remaining balance. (Petitioner's letter ("Pet. Ltr."), dated January 11, 2000).

Petitioner asserts that "in the legally binding court papers . . . [it] show[s] [that] all responsibility except for the amount assigned to [Petitioner], which [she has] already paid double the amount, have been legally assigned to Richard L. Rodocker [Petitioner's former husband]." (Pet. Ltr., Attachment B). However, as a co-signer on the Security Agreement and Retail Installment Contract, dated July 29, 1991 (Secretary's Statement, unmarked Exh.), Petitioner is jointly and severally liable with her former husband for repayment of the debt. "Liability is characterized as joint and several when a creditor may sue the parties to an obligation separately or together." Amy Frazier, HUDBCA No. 99-C-SE-Y117 (July 26, 1999). This means that the Secretary may proceed against any co-signer for the full amount of the debt.

A divorce decree purporting to release Petitioner from this joint obligation does not affect the claims of an existing creditor unless the creditor was a party to the action. Wendi Kath, HUDBCA No. 89-4518-L8, at 2 (December 26, 1989). In the present case, the divorce decree did not release Petitioner from her joint and several liability under the terms of the installment contract because neither the Secretary nor the lender were parties to the divorce action. The divorce decree only determined the rights and liabilities between Petitioner and her former husband, not third parties. Kimberly S. King (Theide), HUDBCA No. 89-4587-L74 (April 23, 1990). While Petitioner may enforce the divorce decree against her former husband in state or local court to recover monies paid to HUD by her to satisfy this obligation, Petitioner, nonetheless, remains liable for the repayment of this debt.

Order

The debt which is the subject of this proceeding is legally enforceable against Petitioner in the amount claimed by the Secretary. The Order imposing the stay of referral of this matter to the IRS for administrative offset or to the U.S. Department of Treasury is vacated.

It is hereby ORDERED that the Secretary is authorized to seek collection of this outstanding obligation by means of administrative offset of any eligible Federal payments due to Petitioner. No collection of this debt shall be by administrative wage garnishment unless Petitioner is given specific notice of the Government's intent to issue such an order and unless Petitioner is given the right to contest the issuance of such an order under the hearing provisions set forth at 31 C.F.R. Part 285.

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May 22, 2000