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I have two questions about a possible divorce

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wherami8

Junior Member
What is the name of your state? CA

Factoids
Married for 7 years
There is no pre-nup
There are no kids
There is only one joint bank account (very new) and one joint store credit card (~3 years old)
Debt and money in the bank roughly comes to a wash
Things are not going well between the two of us for quite some time
I saw an email I was not supposed to see, in which she was telling her friend that she is keeping tab on my finances by snooping so that when she files for divorce, she will get every penny *she deserves*.
For all intents and purposes, she does not work or when she does, she contributes less than 10% to the family coffers

Questions

1. With the housing market downturn, if divorce happens and we have to get rid of the house, we will take a good 100K bath between the current market value and purchase amount. Even though we have purchased the while being married, she insisted to stay out of the deed and the mortgage. If we lose the 100K, this will be either a foreclosure or a short sale. In either case, there are some tax implications I suppose. Since I am the owner on the papers, am I going to take this income hit on my own, or will it be equally distributed among the community, i.e. me and her ?


2. I have withdrawn a bit of money from my savings to alleviate a situation on my part of the family. Bank acct is in my name but money comes in from my earnings which I am sure is considered a community property. If she files for divorce, is she entitled to half of the money I have withdrawn from this account ? If yes, under the circumstances, can I bring up expenses we have incurred in the past year or two just because of her ?

Thank you

Greg
 


mistoffolees

Senior Member
What is the name of your state? CA

Factoids
Married for 7 years
There is no pre-nup
There are no kids
There is only one joint bank account (very new) and one joint store credit card (~3 years old)
Debt and money in the bank roughly comes to a wash
Things are not going well between the two of us for quite some time
I saw an email I was not supposed to see, in which she was telling her friend that she is keeping tab on my finances by snooping so that when she files for divorce, she will get every penny *she deserves*.
For all intents and purposes, she does not work or when she does, she contributes less than 10% to the family coffers

Questions

1. With the housing market downturn, if divorce happens and we have to get rid of the house, we will take a good 100K bath between the current market value and purchase amount. Even though we have purchased the while being married, she insisted to stay out of the deed and the mortgage. If we lose the 100K, this will be either a foreclosure or a short sale. In either case, there are some tax implications I suppose. Since I am the owner on the papers, am I going to take this income hit on my own, or will it be equally distributed among the community, i.e. me and her ?


2. I have withdrawn a bit of money from my savings to alleviate a situation on my part of the family. Bank acct is in my name but money comes in from my earnings which I am sure is considered a community property. If she files for divorce, is she entitled to half of the money I have withdrawn from this account ? If yes, under the circumstances, can I bring up expenses we have incurred in the past year or two just because of her ?

Thank you

Greg
1. You each get 1/2 of the assets and debt. She is therefore entitled to 1/2 of the value of the house minus 1/2 of the mortgage. If the mortgage is greater than the value, then she has a negative value - which she is responsible for. You would then use the other assets to balance this out. For example, if the house is worth $100 K less than the mortgage and you have $100 K in other assets, then if one person takes both the house and the other assets, it's a wash and everyone comes out even.

NOTE - this is mortgage value. If you paid $500 K for it and it's worth $400 K, but the mortgage is only $300 K, your paper loss is irrelevant. The equity in the house is $100 K ($400 K value minus $300 K mortgage). You're better off forgetting what you paid and focus on the value minus the mortgage.

2. You're going to need to discuss an attorney on this. In principle, if you took money from the account and gave it to a family member, it may be considered an attempt to hide assets from her and from the court to improve your post-divorce situation. You need to be very careful. Your personal expenses, OTOH, are a different matter. If she bought herself a brand new Ferrari, there's little you can do about it. You will be entitled to 1/2 of the market value minus debt. If, OTOH, it's a purchase with little or no residual value (she took a cruise around the world), you probably won't get anything out of it. Married couples are allowed to spend money on themselves and the court probably won't intervene unless it's truly abusive.
 

wherami8

Junior Member
Thanks for your response

NOTE - this is mortgage value. If you paid $500 K for it and it's worth $400 K, but the mortgage is only $300 K, your paper loss is irrelevant. The equity in the house is $100 K ($400 K value minus $300 K mortgage). You're better off forgetting what you paid and focus on the value minus the mortgage.
I am painfully aware of this fact. The house value right now, is about 100K less than the mortgage balance, and with a very little money left after all the debt is erased from loans and credit cards, there is no way that we can keep the house.

2. You're going to need to discuss an attorney on this. In principle, if you took money from the account and gave it to a family member, it may be considered an attempt to hide assets from her and from the court to improve your post-divorce situation. You need to be very careful. Your personal expenses, OTOH, are a different matter. If she bought herself a brand new Ferrari, there's little you can do about it. You will be entitled to 1/2 of the market value minus debt. If, OTOH, it's a purchase with little or no residual value (she took a cruise around the world), you probably won't get anything out of it. Married couples are allowed to spend money on themselves and the court probably won't intervene unless it's truly abusive.
This one I think I did not make very clear. I did not hand the money to a family member. I just had to spend quite a bit including few very expensive trips I had to make due to this family matter. Yes, I may have given few dollars here and there to other family members, but I spent this money I took from the account mostly myself. It was spent while I Was dealing with the family issue. This is the thorny point. If she can take a cruise around the world and I can not do a damn thing about it, can she ask for her share for the money I spent on my own, without asking her ?

Thanks again.

Greg
 

mistoffolees

Senior Member
Thanks for your response



I am painfully aware of this fact. The house value right now, is about 100K less than the mortgage balance, and with a very little money left after all the debt is erased from loans and credit cards, there is no way that we can keep the house.



This one I think I did not make very clear. I did not hand the money to a family member. I just had to spend quite a bit including few very expensive trips I had to make due to this family matter. Yes, I may have given few dollars here and there to other family members, but I spent this money I took from the account mostly myself. It was spent while I Was dealing with the family issue. This is the thorny point. If she can take a cruise around the world and I can not do a damn thing about it, can she ask for her share for the money I spent on my own, without asking her ?

Thanks again.

Greg
If you can't afford to keep the house, you're going to have to sell it and take the loss. She will be responsible for half of the debt, just as she'd have gotten half the equity if the value went up. In practice, though, the bank will try to collect the money from whoever they can get it from. If they can collect 100% from you, they will do it - and then it will be up to you to try to collect the balance from her. You may end up with a short sale or even bankruptcy, though.

If you spent the money on yourself on travel expenses to visit a family member, there's probably little she can do about it.
 
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LdiJ

Senior Member
Thanks for your response



I am painfully aware of this fact. The house value right now, is about 100K less than the mortgage balance, and with a very little money left after all the debt is erased from loans and credit cards, there is no way that we can keep the house.
Can you afford to continue to make the house payments and live there yourself? Since she is not on the mortgage or the deed, that is an option. Obviously you have been paying the mortgage by yourself so far, why can't you continue? Although she would technically be responsible for half of the debt and you are in a community property state, the reality of things is that the mortgage company isn't going to go after her, they are going to go after you.



This one I think I did not make very clear. I did not hand the money to a family member. I just had to spend quite a bit including few very expensive trips I had to make due to this family matter. Yes, I may have given few dollars here and there to other family members, but I spent this money I took from the account mostly myself. It was spent while I Was dealing with the family issue. This is the thorny point. If she can take a cruise around the world and I can not do a damn thing about it, can she ask for her share for the money I spent on my own, without asking her ?

Thanks again.

Greg
I wish you weren't being so vague about the "family matter", but it doesn't sound like a situation where she could claim that you dissipated assets. Make sure that you are not vague with your attorney.
 

Bali Hai

Senior Member
Can you afford to continue to make the house payments and live there yourself? Since she is not on the mortgage or the deed, that is an option. Obviously you have been paying the mortgage by yourself so far, why can't you continue? Although she would technically be responsible for half of the debt and you are in a community property state, the reality of things is that the mortgage company isn't going to go after her, they are going to go after you.





I wish you weren't being so vague about the "family matter", but it doesn't sound like a situation where she could claim that you dissipated assets. Make sure that you are not vague with your attorney.
Not that she won't try, as her cruise ship passes through the Mediterranean.
 

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