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Wife is a cumpulsive debtor

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dwflo

Guest
Wife is a compulsive debtor

Illinois- Shortly after we married, it became appearent that my wife could not handle money. As a result, we have had separate finances for the past 10 years. She 'binge' spends where she runs up thousand$ on credit and then can't afford to pay it back and doesn't manage the debt (unopened bank statements hidden all over). She also writes bad checks occasionally (police showing up at our door).

I used to try to pay her debts, but I now realize that this is not helping her really. I manage all our household finances (mortgage, car payments, etc etc). She holds an average paying job in which she does not contribute any money to the 'household'.

She managed to stay 'clean' a few years ago, enabling us to purchase a new house together, but since I have stopped paying her creditors, she has totally trashed her credit (not payed dozen creditors for over four months). I estimate she owes 14K $. Also some bad checks.

I have near perfect credit, have not posessed or used a credit card in 7 years, have a good income and never made a late payment.

My question is: what options do I have to protect our 9yo daughter, myself, assets, etc? What would happen if we divorced? How can I simply even refi- my mortgage?
 
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Illinois Dad

Guest
I don't like to burst your bubble there but guess what? You may think you have perfect credit but get your hands on your credit report. All those debts she has incurred, all the write-offs, bad checks, etc. will show up on your report. I don't know how it is in other states, but in Illinois when you are married your credit histories are connected. And that house you bought and you make the payments on? That belongs to her as well. Illinois is a community property state. I don't know that there is anything you can do to protect your assets...what is it you wish to protect them from? To keep her from selling them? Just make sure your name is on everything along with hers then she can't liquidate them without your signature. Are you wanting to protect them from attachment or lein? Creditors such as the ones you are talking about cannot put leins on property as a means of collecting these kinds of debts. You should take a look at her credit card statements or call the credit card companies. If she used your name to open any joint accounts, the creditors can attach your wages. Best to work with them to avoid this at all costs. What is it you want to protect your daughter from? Heck, I bet mom buys her some pretty cool stuff!

As for the divorce question, there would be an equitable distribution of the debt. It doesn't matter if there is $10k worth of manicures and facials on the credit cards, it is marital debt. The judge will look at the ability of each party to pay and decide who gets to pay what. If you out-earn her by a great deal it is likely that you would end up with 60% or so of the debt. The same kind of distribution of assets would happen. Any asset acquired after the marriage took place is a marital asset. So hold off on that place in the Hamptons or the new Ferrari until you are divorced.

I am not sure I understand your question about refinancing. Your tarnished credit report will play a big part in that, but if you have a solid payment history with the mortgage company that may help. This would be much easier to do if you were divorced and you could show them proof that a good portion of the debt was discharged to your ex-wife and you could justify the black marks on the report as expenditures she made. It will be a hassle and just one more way they have of continuing to haunt us even post-divorce!!!
 
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dwflo

Guest
I'm shocked! I have been told by many (non-attorney types) that our credit histories are separate. For years I struggled to make her card payments and bail her out of the messes she placed herself in financially. Marriage counselors, friends, family members, have all told me 'Why do this! - its her credit, let her ruin it'. So I stopped paying and let her crash.

I have a feeling of 'damned if I do, damned if I don't'.
 
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Illinois Dad

Guest
Well I, too, am a non-lawyer type but I speak from what I have seen personally. It is a big shock to be doing something like going to buy a car and having the finance manager say he is sorry, but all these things that are showing up on your credit report make them unable to finanace you. Lo and behold, there is a copy of the credit report with all the ex spouses debts listed. Do your self a favor and find the website for any of the major credit reporting companies, pay the $30 or whatever they want, and run a copy of this report for yourself. It will save you not only embarrasment later, but each time you apply for credit and are refused it negatively affects your credit rating (Imperica score) even further. Go to a search engine and type in a search for Equifax. There will be info on getting the report there.

I can offer opinions on your other concerns, but you need to answer the questions I asked in my other reply.

Good luck!
 
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dwflo

Guest
Are you sure IL is a community property state? I have been told by others that this is not the case. Assuming IL is not, what liability could I face in a divorce case. None of her debt was incurred to support the family and none was incurred by myself. Also, any assets that we own were aquired by and paid for by me. What rights does she have regarding these (1 house with 40% equity and 2 cars + some investments)? She also has a history of emotional/mental health problems and 1 violence incident. How could this effect anything?
 
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Illinois Dad

Guest
Some FAQ's from an Illinois divorece attorney's website regarding property rights...


1) What are the property rights of married people?

Married persons have the same rights as single persons to individually own, buy, sell and give away property. However, once a marriage is undergoing a breakdown and until a judgment of dissolution has been entered, the law recognizes the concept of marital property, a form of common ownership which starts at the time the dissolution proceeding is filed and continues only while the case is pending.

2) Once a divorce action is filed, can a spouse be restricted from dealing with marital property of his or her non-marital property?

The right of the owner of the property to transfer, assign or convey it is not restricted unless the owner is specifically enjoined by a court from doing so. If one spouse is concerned that the other will give away or hide property, the court may enter a "preliminary injunction" to prevent "dissipation" of assets.

3) What is dissipation of assets?

Once the marriage undergoes a breakdown, a spouse who gives property away (even to a child or parent), uses property for a purpose unrelated to the marriage, or for an improper purpose, is said to have dissipated the estate. A party who dissipates will be called to account for the property when the marital estate is divided.

4) What is "marital property"?

For purposes of distribution of property in a dissolution action, all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage, except by gift or inheritance, including non-marital property transferred into some form of co-ownership between the spouses, is presumed to be marital estate or marital property. The name in which property is held is not terribly important. Regardless of whether title is held individually or by the spouses in some form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, or community property, if the property was acquired during the marriage (except by gift or inheritance) it is marital property, and both spouses have an interest in it.

5) What is considered "non-marital property"?

A party's non-marital estate (or non-marital property) is:
property acquired by gift, legacy or descent;
property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, legacy or descent;
property acquired by a spouse after a judgment of legal separation;
property excluded by valid agreement of the parties;
any judgment or property obtained by judgment awarded to a spouse from the other spouse;
property acquired before the marriage;
the increase in value of property acquired by a method listed in paragraphs (1) through (6), irrespective of whether the increase results from a contribution of marital property, non-marital property, the personal effort of a spouse, or otherwise, subject to the right of reimbursement; and
income from property acquired by a method listed in paragraphs (1) through (7) if the income is not attributable to the personal effort of a spouse.

6) How are property and debt distributed between the parties in a divorce case?

Each party is generally assigned his or her non-marital property. The marital estate and marital obligations (debt incurred during the marriage, except for dissipation purposes) is to be equitably distributed between the parties, without regard to marital misconduct, considering the following factors:
the contribution of each party to the acquisition, preservation, or increase or decrease in value of the marital or non-marital property, including the contribution of a spouse as a homemaker or to the family unit
the dissipation by each party of the marital or non-marital property
the value of the property assigned to each spouse
the duration of the marriage
the relevant economic circumstances of each spouse when the division of property is to become effective, including the desirability of awarding the family home, or the right to live therein for reasonable periods, to the spouse having custody of the children
any obligations and rights arising from a prior marriage of either party
any antenuptial agreement of the parties
the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, and needs of each of the parties
the custodial provisions for any children
whether the apportionment is in lieu of or in addition to maintenance
the reasonable opportunity of each spouse for future acquisition of capital assets and income; and
the tax consequences of the property division upon the respective economic circumstances of the parties.

7) If the spouses have not kept their non-marital property separate, but they have combined their ownership in joint tenancies and otherwise, how does the court decide on property division?

Spouses not infrequently commingle their marital and non-marital estates. This may cause grave complications, income and expense if the parties later divorce. Unless otherwise agreed by the spouses, commingled property is treated as follows: (1) When marital and non-marital property are commingled by a spouse contributing non-marital property to the marital estate, or by the parties contributing marital property to a spouse's non-marital estate, resulting in a loss of identity of the contributed property, the contributed property is transmuted to the estate receiving the contribution. Example: the wife contributes inherited (non-marital) funds to the purchase of house which is held in joint tenancy by both parties. The wife's non-marital funds are transmuted to marital funds. However, (2) When one estate of property makes a contribution to another estate of property, or when a spouse contributes personal effort to non-marital property, the contributing estate shall be reimbursed from the estate receiving the contribution notwithstanding any transmutation. Reimbursement can only occur with respect to a contribution which is retraceable by clear and convincing evidence, or was a gift, or, in the case of a contribution of personal effort of a spouse to non-marital property, unless the effort is significant and results in substantial appreciation of the non-marital property. Personal effort of a spouse is considered to be a contribution by the marital estate. The court may provide for reimbursement out of the marital property to be divided or by imposing a lien against the non-marital property which received the contribution.

8) Can a court protect the children's financial well-being from a parent's ill will or waste of property?

The court, if necessary to protect and promote the best interests of the children, may set aside a portion of the jointly or separately held estates of the parties in a separate fund or trust for the support, maintenance, education, and general welfare of any minor, dependent, or incompetent child of the parties.
 

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