In the Matter of THELMA SMITH, Petitioner	HUDBCA No. 00-A-NY-AA8 Claim No. 7-711686370B

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 supporting documentary evidence in support of his position that Petitioner is indebted to the Department in a specific amount due to Petitioner's default on a mobile home loan that was insured against nonpayment by the Secretary pursuant to Title I of the National Housing Act 12 U.S.C. Sec. 1703.

Petitioner does not dispute the existence or amount of the debt incurred pursuant to the Retail Installment Contract, or that the debt is delinquent. Rather, Petitioner asserts that the debt is not legally enforceable against her because her deceased husband, Douglas Smith, was responsible for the debt since (1) the loan was based solely on her husband's income, and (2) she was not included in the loan process. (Petitioner's Letter, hereinafter "Pet. Ltr.", undated). Petitioner further implies that the death of her spouse may render the debt unenforceable. Id.

Petitioner is mistaken in her belief that she was not involved in the loan process. The Retail Installment Contract and Truth In Lending Disclosure document clearly bears Petitioner's signature in addition to the signature of her deceased spouse. (Secretary's Statement, dated Dec. 6, 1999, Gov't Exh. A). As a co-signer of the loan, regardless of whether Petitioner's income was taken into consideration during the loan approval process or whether her husband is deceased, Petitioner is jointly and severally liable for repayment of the debt. See Norma Murphy and Estate of Ned Murphy, HUDBCA No. 92-A-NY-P221 (Apr. 7, 1993). "Liability is characterized as joint and several when a creditor may sue the parties to an obligation separately or together." Id. (quoting Mary Jane Lyons Hardy, HUDBCA No. 87-1982-G314 at 3 (July 15, 1987) (internal quotations omitted). Petitioner has submitted no evidence, nor has she made a persuasive legal argument to prove that her obligation to repay this debt was extinguished by the death of her husband. Petitioner has also not submitted any evidence indicating that the lender released her from her obligation to repay the debt. See Ronald G. Brauer, HUDBCA No. 99-C-CH-Y304 (Feb. 29, 2000).

Petitioner also requests that this Board consider her financial hardship in determining whether the debt is enforceable against her. Petitioner states that, based on her income, she "is not able to pay" the incurred debt. (Pet. Ltr.). This Board must determine whether, as a matter of law, this debt is legally enforceable against Petitioner. Unfortunately, evidence of hardship, no matter how compelling, cannot be taken into consideration in determining whether the debt is legally enforceable. See Della Coleman, HUDBCA No. 99-C-SE-Y73 (Feb. 23, 2000) (citing Anna Filiziana, HUDBCA No. 95-A-NY-T11 (May 21, 1996)).

Petitioner may wish to negotiate repayment terms with the Department, this Board is not authorized to extend, recommend, or accept any payment plan or settlement offer on behalf of the Department. Petitioner may wish to discuss this matter with Lester J. West, Director, HUD Albany Financial Operations Center, 52 Corporate Circle, Albany, NY 12203-5121. His telephone number is 1-800-669-5152, extension 4206. A review of Petitioner's financial status may be conducted if Petitioner submits to that HUD Office a Title I Financial Statement (HUD Form 56142).

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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June 19, 2000