What is the name of your state (only U.S. law)? New York
This is quite long and you need a pencil and paper as you read this.
Please help me settle an equitable distribution issue. I am an executive paralegal and we presently have a client that is buying out the marital residence. Here are the figures. House Value $115000.00 Debts 1st Mortgage $27000.00 HELOC $39000.00 Total Debt $66000.00 So Total Debt - Value of Home = Equity This gives us a total equity of $49000.00 Wife refinances the home and pays off all the debt, but still has to give her husband his share for the house. So we are splitting the equity 50/50 between the parties for a total of $24500.00 due to each party. So the wife pays the husband $24500.00 for his share of the equity. (I hope you are still following me, but I know this should be cut and dry) But come to find out, $19450.00 of the HELOC that was owed was spent by husband for a car without the wife knowing, so this becomes a personal debt (they both agree this point). So in turn, he has to reimburse his wife for that debt. But she is entitled to recoup the $19450.00 she had paid off that turned out to be her husband’s personal debt.
They both agree she needs to get reimbursed and he owes her the $19450.00, so he takes it out of the money she gave him for the buyout of the home and this leaves him with $5050.00 (these are all based on approximate figures). Do you agree with this distribution? I am getting different answers. This is how we (the attorney I work with) calculated it from the beginning. However, the opposing counsel said no, “he’s paying twice that way.” (Huh??? This is where I start to disagree,) We both agree that the equity of the home is 49000.00 and that the husband owes the $19450.00, but they are saying we are calculating wrong and that the husband’s debt should be deducted from the total equity first. This gives us $29550.00 left in the equity. Then they say to split it $50 /50 for a total of $14775.00 coming to him from our client. That is almost a $10,000.00 different then the way we calculated it. He doesn’t have the money to repay the HELOC before our client refinances, so we are taking it out of his equity as I said. Now, if the husband had paid his wife the $19450.00 out of his own funds in a bank somewhere prior to the refinancing, that would reduce the debt by that much leaving a total debt of $46550.00 which in turns gives us an equity of $68450.00. So now we have more equity to distribute. At a 50/50 split the husband is now owed $34225.00 for his portion of the home. (Sorry this is so long but I want to make sure you understand the thought process we each have) But in reality, the husband doesn’t have that money to pay back in so that gives us the scenario I had explained in detail. Moreover, if we figure the way they want us to, our client is paying half of his debt such as below: $49000.00 divided by 2 = $24500.00 They each get $24500.00 in credit. Now to get their final figure of the $14775.00 for him left over from paying his debt, Wife gets $24500.00 Husband gets $24500.00 - $9725.00 (goes back to wife) = $14775.00 Wife has already $24500.00 now plus the $9725.00 the husband just reimbursed her for a total of $34225.00 actually credited to our client. So they say my client gets $34225.00 and their client gets $14775.00. (Grrrrrr) Now when you add the two distributed equities together you get: $34225.00 (wife) plus $14775.00 (husband) = $49000.00 but remember he only paid half of his debt from his equity and our client ate the other half. Had the total personal debt been paid between the two, it would be a total of $29550.00 of actually distributed final equity. Which is exactly $9745.00 less because our client ate it.
This doesn’t seem fair. I believe our client is going to have to pay $9725.00 too much and they are deducting his debt from the total marital equity of $49000.00 ($49000.00 - $19450.00 = $29550.00). They are basically saying that the total equity free and clear of all encumbrances is the $29550.00. They shouldn’t be deducting his personal debt this way. It should be deducted from his own funds from his equity. I hope this didn’t confuse you, but when we originally calculated this, it only took a few minutes, now it has turned into this mess. This is why I wanted to explain each step. I think the sequence of events are very important here because depending when you take out the husbands personal debt, you get different figures. Also, when we found out about his personal debt, our client was hoping he didn’t have the money to pay it off before she refinanced for the reason that it would increase the equity and she would have to pay him more. But remember, we said he doesn’t have the funds to do this so he needs to take it out of his cut. My head is spinning because I believe I am right, and if I am ever wrong I am the first to admit it. But I believe they are calculating this way because it benefits their client, while costing our client more and gives him more money in his pocket.
In these scenarios it is important who the buyer is, such as one of the spouses or a third party and also whether the husband pays back the debt before the sale of home or not. I am really stressing over something that should be so easy. We have never had conflicting or confusing things like this happen before in our firm. I am getting conflicting answers for both sides. If he is paying twice, I don't see anything proving that other than it being said. I do not see double reimbursements. It is also import to know that the husband still has a care woth the same amount that he purchased with the money. That is part of his equity now.
This is quite long and you need a pencil and paper as you read this.
Please help me settle an equitable distribution issue. I am an executive paralegal and we presently have a client that is buying out the marital residence. Here are the figures. House Value $115000.00 Debts 1st Mortgage $27000.00 HELOC $39000.00 Total Debt $66000.00 So Total Debt - Value of Home = Equity This gives us a total equity of $49000.00 Wife refinances the home and pays off all the debt, but still has to give her husband his share for the house. So we are splitting the equity 50/50 between the parties for a total of $24500.00 due to each party. So the wife pays the husband $24500.00 for his share of the equity. (I hope you are still following me, but I know this should be cut and dry) But come to find out, $19450.00 of the HELOC that was owed was spent by husband for a car without the wife knowing, so this becomes a personal debt (they both agree this point). So in turn, he has to reimburse his wife for that debt. But she is entitled to recoup the $19450.00 she had paid off that turned out to be her husband’s personal debt.
They both agree she needs to get reimbursed and he owes her the $19450.00, so he takes it out of the money she gave him for the buyout of the home and this leaves him with $5050.00 (these are all based on approximate figures). Do you agree with this distribution? I am getting different answers. This is how we (the attorney I work with) calculated it from the beginning. However, the opposing counsel said no, “he’s paying twice that way.” (Huh??? This is where I start to disagree,) We both agree that the equity of the home is 49000.00 and that the husband owes the $19450.00, but they are saying we are calculating wrong and that the husband’s debt should be deducted from the total equity first. This gives us $29550.00 left in the equity. Then they say to split it $50 /50 for a total of $14775.00 coming to him from our client. That is almost a $10,000.00 different then the way we calculated it. He doesn’t have the money to repay the HELOC before our client refinances, so we are taking it out of his equity as I said. Now, if the husband had paid his wife the $19450.00 out of his own funds in a bank somewhere prior to the refinancing, that would reduce the debt by that much leaving a total debt of $46550.00 which in turns gives us an equity of $68450.00. So now we have more equity to distribute. At a 50/50 split the husband is now owed $34225.00 for his portion of the home. (Sorry this is so long but I want to make sure you understand the thought process we each have) But in reality, the husband doesn’t have that money to pay back in so that gives us the scenario I had explained in detail. Moreover, if we figure the way they want us to, our client is paying half of his debt such as below: $49000.00 divided by 2 = $24500.00 They each get $24500.00 in credit. Now to get their final figure of the $14775.00 for him left over from paying his debt, Wife gets $24500.00 Husband gets $24500.00 - $9725.00 (goes back to wife) = $14775.00 Wife has already $24500.00 now plus the $9725.00 the husband just reimbursed her for a total of $34225.00 actually credited to our client. So they say my client gets $34225.00 and their client gets $14775.00. (Grrrrrr) Now when you add the two distributed equities together you get: $34225.00 (wife) plus $14775.00 (husband) = $49000.00 but remember he only paid half of his debt from his equity and our client ate the other half. Had the total personal debt been paid between the two, it would be a total of $29550.00 of actually distributed final equity. Which is exactly $9745.00 less because our client ate it.
This doesn’t seem fair. I believe our client is going to have to pay $9725.00 too much and they are deducting his debt from the total marital equity of $49000.00 ($49000.00 - $19450.00 = $29550.00). They are basically saying that the total equity free and clear of all encumbrances is the $29550.00. They shouldn’t be deducting his personal debt this way. It should be deducted from his own funds from his equity. I hope this didn’t confuse you, but when we originally calculated this, it only took a few minutes, now it has turned into this mess. This is why I wanted to explain each step. I think the sequence of events are very important here because depending when you take out the husbands personal debt, you get different figures. Also, when we found out about his personal debt, our client was hoping he didn’t have the money to pay it off before she refinanced for the reason that it would increase the equity and she would have to pay him more. But remember, we said he doesn’t have the funds to do this so he needs to take it out of his cut. My head is spinning because I believe I am right, and if I am ever wrong I am the first to admit it. But I believe they are calculating this way because it benefits their client, while costing our client more and gives him more money in his pocket.
In these scenarios it is important who the buyer is, such as one of the spouses or a third party and also whether the husband pays back the debt before the sale of home or not. I am really stressing over something that should be so easy. We have never had conflicting or confusing things like this happen before in our firm. I am getting conflicting answers for both sides. If he is paying twice, I don't see anything proving that other than it being said. I do not see double reimbursements. It is also import to know that the husband still has a care woth the same amount that he purchased with the money. That is part of his equity now.
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