• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Help Please

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

CrazyinCT

Junior Member
What is the name of your state (only U.S. law)? CT
My wife decided that she wanted a divorce this past fall. We decided to go with a mediator, which I don't think is working well. The mediator seems to me at least to be on my wifes side. I have consulted lawyers but I can't afford one. We own a house(which I haven't lived in since Sept, the mediator said that it would be better for the mediation if I moved out) that doesn't have much equity although it is not on the market so we don't really know.
I have agreed to give the house to my wife if she assumes all debt.
The biggest problem is the business that we own together. My parents loaned us a large amount of money to purchase the business and the property. Now she wants to take the business 100% and leave me a portion of the debt to my parents.
We were close to getting through mediation when we hit this roadblock now it is stalled.
I am quickly going into more and more debt and do not know what to do she has stopped making payments to my parents on the loan which was always treated as a business expense and it is now hurting them as well.
 


nextwife

Senior Member
As a financial backer of the company, your parents have every right to expect to be bought out in full if you would no longer be affiliated with the business. They provided their money to provide YOU a business. If you aren't going to have that business, they have every right to expect to be paid back. A sort of DUE ON TRANSFER clause.

What sort of loan agreement did you have with them?

Additionally, if wife keeps the property, you need to insist she refinance you off the loan or sell. Do NOT agree to leave your name on the mortgage if the home is not being sold.
 

CrazyinCT

Junior Member
thanks for the reply. The loan was written as a personel loan to my wife and I with no security. But it was used 100% to buy the business.

On the advice from a lawyer I requested alimony of $1 which enables the amount to be changed for the period of 1 year for her to get the mortgage out of my name. The mediator said this wasn't long enough.

I have been taking no money from the business since we seperated. Of course she says that there is no profit but she is paying the mortgage and can afford to go out and have parties and fix up the shop and buy new furniture. The lawyer said that they only way to check on profits was to hire an accountant which would cost $$$$$

I'm living off soup and falling behind on my bills.
 

nextwife

Senior Member
thanks for the reply. The loan was written as a personel loan to my wife and I with no security. But it was used 100% to buy the business.

On the advice from a lawyer I requested alimony of $1 which enables the amount to be changed for the period of 1 year for her to get the mortgage out of my name. The mediator said this wasn't long enough.

I have been taking no money from the business since we seperated. Of course she says that there is no profit but she is paying the mortgage and can afford to go out and have parties and fix up the shop and buy new furniture. The lawyer said that they only way to check on profits was to hire an accountant which would cost $$$$$

I'm living off soup and falling behind on my bills.
Since the loan is to YOUR parents, what is their opinion about what they are willing to agree to if you no longer own the business? Do they, as lender agree to see you completely out of the business before they've been repaid?
 

CrazyinCT

Junior Member
They would rather the loan be paid off in full if I am not going to be involved. As an option they would be willing to let her continue to make the payments with some kind of security but there really isn't since there is not enough equity in either the home or the business to do that.
 

LdiJ

Senior Member
I think that you are unfortunately being given a little bit of a false impression regarding the loan.

A loan contract is enforceable unders its terms, and its terms only. While of course your parents would expect to be paid back in full, if you were severed from the business, that's a moral issue, not a legal one, unless the contract had such language.

If it was a personal loan, with no collateral, then you are both equally responsible for the loan, despite the fact that you used it to start a business. Your parents couldn't sue one of you without suing both of you.

A judge would certainly make your wife 100% responsible for the loan if she were to be keeping the business, but under the loan contract you would be equally responsible and the judge cannot make that go away.

So...how much was the loan for, what kind of business is it, how long has the business been in operation, and what kind of profits have you been showing on your tax return?.

Also, who is the key player between the two of you as far as the business is concerned? Who can the business least afford to lose? Who did most of the work of the business?
 

CrazyinCT

Junior Member
I think that you are unfortunately being given a little bit of a false impression regarding the loan.

A loan contract is enforceable unders its terms, and its terms only. While of course your parents would expect to be paid back in full, if you were severed from the business, that's a moral issue, not a legal one, unless the contract had such language.

If it was a personal loan, with no collateral, then you are both equally responsible for the loan, despite the fact that you used it to start a business. Your parents couldn't sue one of you without suing both of you.

A judge would certainly make your wife 100% responsible for the loan if she were to be keeping the business, but under the loan contract you would be equally responsible and the judge cannot make that go away.

So...how much was the loan for, what kind of business is it, how long has the business been in operation, and what kind of profits have you been showing on your tax return?.

***130k, 3yrs since we bought the existing Hair Salon, 50k in profits after alot of expense
She is currently not paying the loan payments(past 3mos)

Also, who is the key player between the two of you as far as the business is concerned? Who can the business least afford to lose? Who did most of the work of the business?
***Currently she is managing the business, when we originally bought it as an investment we had a manager working there. She was doing the marketing/supervising and I did the remodeling and Maintenance. We both were supposed to keep jobs apart from the business. Shortly (3-4 mos) before the she filed for divorce she quit her job and took over management.
 

LdiJ

Senior Member
***Currently she is managing the business, when we originally bought it as an investment we had a manager working there. She was doing the marketing/supervising and I did the remodeling and Maintenance. We both were supposed to keep jobs apart from the business. Shortly (3-4 mos) before the she filed for divorce she quit her job and took over management.
I asked you a whole lot more questions than you answered. If you cannot be bothered to answer all of my questions, then I cannot be bothered to help you.
 

CrazyinCT

Junior Member
sorry the other answers were above.

***130k, 3yrs since we bought the existing Hair Salon, 50k in profits after alot of expense
She is currently not paying the loan payments(past 3mos)

Currently she is more of a key part of the shop than I am. I did most of the maintenance, in the beginning we did more of the employee hiring/firing together, also more of the marketing/advertising. She slowly worked her way in more, I think she was planning the divorce for longer than I knew.
 

LdiJ

Senior Member
sorry the other answers were above.

***130k, 3yrs since we bought the existing Hair Salon, 50k in profits after alot of expense
She is currently not paying the loan payments(past 3mos)

Currently she is more of a key part of the shop than I am. I did most of the maintenance, in the beginning we did more of the employee hiring/firing together, also more of the marketing/advertising. She slowly worked her way in more, I think she was planning the divorce for longer than I knew.
She needs to buy out your share of the shop, and you are going to be responsible, one way or another, for a share of the loan. Either it will effect the amount that she has to pay you for the shop, or you will be paying part of it out of the proceeds of your share of the shop.

It could also be exchanged for other marital assets.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top