• 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.

Husband is self-employed, show no income

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

wdwfan20000

Junior Member
What is the name of your state (only U.S. law)? FL
I am looking to divorce my husband after 3 yrs on marriage (2nd for each of us) and no additional kids. My concern is that he is self-employed and shows no income on income taxes, plus all the debt/assests are in my name. Will I get stuck will all the debt?
 


mistoffolees

Senior Member
What is the name of your state (only U.S. law)? FL
I am looking to divorce my husband after 3 yrs on marriage (2nd for each of us) and no additional kids. My concern is that he is self-employed and shows no income on income taxes, plus all the debt/assests are in my name. Will I get stuck will all the debt?
Yes and now.

You're already stuck with the debt. The divorce won't relieve you of any obligations you have to the lenders.

The divorce court will probably assign your husband responsibility for 1/2 of the marital portion of the debt. It IS possible to get a court order for your husband to have to pay 1/2 of the debt, but you're still obligated to the lender if he doesn't pay (and then you'd have to sue him for the missed payments).

A better solution would be to ask the court for enough of the assets to cover the debt rather than dividing the debt. That is, let's say that you have $100 K in debt and $200 K in assets.

Typically, you'd each get $100 K in assets and $50 K of the debt. Instead, you could explain to the court that you are concerned about his ability to pay his portion of the debt, so you will take on all of the debt as long as you receive $150 K in assets and he gets $50 K. The end result is the same, but it's safer for you.

If he tries to argue poverty to the court, you could ask for his full financial records. It is generally the case that a small business with zero net income will have significant owner benefit which is what his 'poverty' needs to be based on rather than taxable net income. For example, my last small business had about $700 K in depreciation expense. Even if we had reported $0 in net income, the owner would have pocketed $700 K in cash from the business. Another example is a business that I've worked at which had net income between $0 and $100 K - but the owner walked away with nearly a million dollars in cash each year. Net income is not a useful indicator of owner benefit in a small, privately owned business.
 

Find the Right Lawyer for Your Legal Issue!

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