a question about filing - is kind of a mess

[nvguy]

What is the name of your state (only U.S. law)? Nevada

I have a friend who is going through a divorce. She does not have a lot of money, has had to retain a lawyer, and is struggling to get through this while keep a roof over her and her sons head. her husband did not retain a lawyer and is pretty much forcing her to pay for it all.

It’s at the point now where the documents are ready to be filed. Husband signed the agreement and it’s ready to be submitted to the judge. My friend has paid what she can (several thousand now) and her lawyer was aware of her financial situation. There was talk of a monthly payment agreement so her attorney was not unaware of how she might need t be paid.

A few days ago she received a letter from her lawyer stating that a lien had been put on the portion of her husbands 401k that she is owed. Approximately 9000. The agreement that was signed states that once the divorce is finalized her husband has 30 days to come up with the 9000 from his 401k. It was to be done by a loan with him being responsible for paying it back.

So in a nutshell, when the divorce is final, she gets the 9000, her husband get a vehicle and tools from the garage, and she can then pay the lawyer.

I understand the lien by her attorney is just to make sure she gets paid for her services although it would have been nice of her to let my friend know instead of just doing it out of the blue.

Now to my question - today she received a letter stating that they would not submit the final documents to the court until she paid the attorney the just over 5000 owed. It’s my understanding, per the agreement with hub, that the attorney wrote, that the 9000 will not be released until the divorce is final. Her attorney is also stating in the letter that she will accrue and interest on the owed money at 12%.

I hope this made sense, is this legit? I am nowhere near being a lawyer but it sounds kind of like extortion. How is she supposed to pay the attorney with the money from the 401k if she cannot receive the funds until the divorce is finalized? How can they charge her interest on money they are owed? It’s seems like a catch 22. They do not submit docs so she cannot get the money to pay them so they string it along making 12%. Any help will be greatly appreciated. Her husband has put her through hell. She even had to go through the DA to get child support. I am very worried about her.

 

[mistoffolees]

What is the name of your state (only U.S. law)? Nevada

I have a friend who is going through a divorce. She does not have a lot of money, has had to retain a lawyer, and is struggling to get through this while keep a roof over her and her sons head. her husband did not retain a lawyer and is pretty much forcing her to pay for it all.

It’s at the point now where the documents are ready to be filed. Husband signed the agreement and it’s ready to be submitted to the judge. My friend has paid what she can (several thousand now) and her lawyer was aware of her financial situation. There was talk of a monthly payment agreement so her attorney was not unaware of how she might need t be paid.

A few days ago she received a letter from her lawyer stating that a lien had been put on the portion of her husbands 401k that she is owed. Approximately 9000. The agreement that was signed states that once the divorce is finalized her husband has 30 days to come up with the 9000 from his 401k. It was to be done by a loan with him being responsible for paying it back.

So in a nutshell, when the divorce is final, she gets the 9000, her husband get a vehicle and tools from the garage, and she can then pay the lawyer.

I understand the lien by her attorney is just to make sure she gets paid for her services although it would have been nice of her to let my friend know instead of just doing it out of the blue.

Now to my question - today she received a letter stating that they would not submit the final documents to the court until she paid the attorney the just over 5000 owed. It’s my understanding, per the agreement with hub, that the attorney wrote, that the 9000 will not be released until the divorce is final. Her attorney is also stating in the letter that she will accrue and interest on the owed money at 12%.

I hope this made sense, is this legit? I am nowhere near being a lawyer but it sounds kind of like extortion. How is she supposed to pay the attorney with the money from the 401k if she cannot receive the funds until the divorce is finalized? How can they charge her interest on money they are owed? It’s seems like a catch 22. They do not submit docs so she cannot get the money to pay them so they string it along making 12%. Any help will be greatly appreciated. Her husband has put her through hell. She even had to go through the DA to get child support. I am very worried about her.

She'll have to come up with the money from some other source since she can't touch the 401K money until the divorce is final. For that matter, it's rather foolish to cash in a 401K to pay legal expenses, anyway, since the fees will eat up a huge chunk of it. She would probably be better off to borrow the money rather than cash in the 401K if she has the ability to pay it back.

Unfortunately, lawyers need to be paid, too. She needs to work out a payment schedule with them.

 

[nvguy]

hi

thx for the reply. the 401 k is her husbands and from what i understand in nevada she is entitled to 50% of it. so he has to provide that to her even with the fees. is why he wants to do the loan instead of taking the tax hit. i agree its foolish to try and pay with the 401k but the reality is she is in a very hard spot. her husband is a dead beat and has strapped her badly. her only option other is to use the 401k she gets to pay for the divorce.

i agree the lawyer needs to be paid. thats not the issue. the issue is the lawyer was aware of her financial situation when she took the case and there was talk of a payment agreement. she has paid over 7600 already to the laywer with a remainder of around 5500.

im confused as to how they can refuse to submit the documents to the court unti paid in full. i think they have moved to garnish the wages but even with that it will take a few years to pay it off at that rate. would the docs still be valid for submission after a few years?

thank you again! i really do appreciate it

 

[mistoffolees]

thx for the reply. the 401 k is her husbands and from what i understand in nevada she is entitled to 50% of it. so he has to provide that to her even with the fees. is why he wants to do the loan instead of taking the tax hit. i agree its foolish to try and pay with the 401k but the reality is she is in a very hard spot. her husband is a dead beat and has strapped her badly. her only option other is to use the 401k she gets to pay for the divorce.

i agree the lawyer needs to be paid. thats not the issue. the issue is the lawyer was aware of her financial situation when she took the case and there was talk of a payment agreement. she has paid over 7600 already to the laywer with a remainder of around 5500.

im confused as to how they can refuse to submit the documents to the court unti paid in full. i think they have moved to garnish the wages but even with that it will take a few years to pay it off at that rate. would the docs still be valid for submission after a few years?

thank you again! i really do appreciate it

You'll need to provide the exact wording of the order, but I suspect you're mistaken if you think she's going to get the full $9,000 in cash. If the order says he has to transfer the full $9,000 401K to her, the he will have to do so, but SHE will be responsible for the taxes and penalties when she cashes it in. If the order says he has to give her $9,000, then that's a different matter. WHAT DOES THE AGREEMENT SAY?

The attorney has the right to not do any more work for her if she's far in arrears. It may not be great PR, but it's their choice. But since neither of us was a party to the discussion, we don't know what might have transpired to cause the attorney to take that position. Maybe she threatened not to pay them? Have her post here herself.

 

[LdiJ]

You'll need to provide the exact wording of the order, but I suspect you're mistaken if you think she's going to get the full $9,000 in cash. If the order says he has to transfer the full $9,000 401K to her, the he will have to do so, but SHE will be responsible for the taxes and penalties when she cashes it in. If the order says he has to give her $9,000, then that's a different matter. WHAT DOES THE AGREEMENT SAY?

The attorney has the right to not do any more work for her if she's far in arrears. It may not be great PR, but it's their choice. But since neither of us was a party to the discussion, we don't know what might have transpired to cause the attorney to take that position. Maybe she threatened not to pay them? Have her post here herself.

Misto, you are misunderstanding what is being said. There will be no taxes on the money because the husband is choosing to BORROW the 9k from his 401k rather than taking a distribution. He will pay back the borrowed money over time (payroll deduction).

 

[nvguy]

401k

correct, it was elected to take a loan out on the 401k with the husband being responsible for paying it back. so no tax penalties would be incurred as far as she is concerned.

i viewed the documents a little bit ago. i think she was seeing something in them that was not there. it seems there was a lien put on the 401k. a copy was sent to the husband as well. my guess is to make it aware that the attorney was going to get paid. she was sent a copy to and tok it to mean the lawyer was going after her. i think what is going on is that the lawyer was making it clear to the husband that he needs to withdrawl the amount he stated he would in the agreement. im sure its also a notice to her that they want to be paid once the money comes in. which is understandable. she never stated she would not pay. this kind of came out of the blue for some reason.

the other letter was something to do with making sure the that they would get paid by her as well. there was some verbal agreements made about making monthly payments and such. i guess at one point the lawyer wanted to setup a payment plan but she wanted to wait until the final total was figured out before it was setup. which i guess makes sense. i know i would want to know what i was paying for before figuring out what to pay. im not really sure how it works.

anyways the issue is whether or not the documents are going to be sat on until she pays. from what i read that was not stated. she just kind of assumed because she was freaking out. its been tough on her the last 8 months with this stuff. so im not sure if that is the case.

the one thing i dont understand is that, as far as i know, the divorce is not complete. so i am not understanding why all this is going on when its done. unless the documents were submitted, which is quite possible, and as far s lawyer is concerned it is done.

again i appreciate the input very much!

thank you!

 

[mistoffolees]

Misto, you are misunderstanding what is being said. There will be no taxes on the money because the husband is choosing to BORROW the 9k from his 401k rather than taking a distribution. He will pay back the borrowed money over time (payroll deduction).

Yes, if he borrows the money, that's correct.

I was specifically responding to her statement that "the 401 k is her husbands and from what i understand in nevada she is entitled to 50% of it. so he has to provide that to her even with the fees."

It would be absurd to think that she would get half of the 401K but he had to make up the fees and penalties so that her 1/2 would be tax free and he'd pay double taxes. In the scenario which was being discussed in this particular post, if they each got 1/2 of the 401K, they would each be responsible for the penalties, taxes, and fees on their half.

 

[LdiJ]

Yes, if he borrows the money, that's correct.

I was specifically responding to her statement that "the 401 k is her husbands and from what i understand in nevada she is entitled to 50% of it. so he has to provide that to her even with the fees."

It would be absurd to think that she would get half of the 401K but he had to make up the fees and penalties so that her 1/2 would be tax free and he'd pay double taxes. In the scenario which was being discussed in this particular post, if they each got 1/2 of the 401K, they would each be responsible for the penalties, taxes, and fees on their half.

I agree, except that there would not be any penalties. Distributions related to a QDRO are excluded from penalty. Regular tax has to be paid, just not the penalty.