Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com.
Dear To Her Credit,
I'm going through a divorce that I didn't see coming. My
husband's financial plan is to have me leave the house and get a place
elsewhere while the process is going on. After which, he wants to keep the
house long enough to stay there and make no payments, and then walk away from
it when the bank initiates foreclosure proceedings.
The house was a foreclosure to begin with, and we have had
to fix so many things that I feel this is not wise. With both our names on the
title, this will mess up our credit even more as we are just coming out of a
bankruptcy back in 2002.
Unfortunately, I won't qualify by myself to refinance and
get his name off the title. In its current condition, we can't really sell the
house, either.
We don't have a lot of bills, just my $3,000 student loan, a
$1,000 personal loan, his $5,000 vehicle loan and $3,000 in credit card debt. I
could make sacrifices and pay the personal loan and vehicle off in less than a
year. (The card is his problem -- he got that behind my back and my name is not
on it.) If I got those extra payments out of the way, I could take over the house
payments on my own and keep the house.
But if I have to move out of the house, most of my money
will go to rent. Since he's in such a hurry to get the divorce and doesn't
really want to see my face around, I have asked him to move out instead and
stay with his brother. The kids (16 and 13) could stay at the house with me. Whenever
the house sold, I'd share half the profits with him.
Am I being unreasonable here? I am just not looking forward
to another 10 years or so in another bankruptcy. To me, that's not the way to
start your retirement. Thanks. -- Alison
Dear Alison,
Under normal circumstances, a spouse cannot force you to
move out of the house you own jointly. Nor can he force you to file for bankruptcy again. Jeena Cho, a San Francisco bankruptcy attorney at
JC Law Group, says, "A husband can't force a wife to
file for bankruptcy. She would have to physically sign the bankruptcy
petition."
I don't see any reason you should even be in danger of
bankruptcy with only $12,000 in nonmortgage debt between the two of you.
Nevertheless, if you don't take action to protect yourself,
and your husband follows through with his destructive plans, you will surely
lose your house and your credit one way or another before this is over.
The first mistake many people make is to believe everything
the spouse who wants to end the marriage says. Maybe it's in the hope things
will work out, or perhaps they can't believe their long-term "for richer,
for poorer" partner could not be
trustworthy. Some spouses, upon being told to get out, simply do so. I've even
heard of one spouse telling her there's a restraining order against her -- and the
traumatized spouse believed it without seeing one piece of paper as evidence!
Instead of moving out, you need to get advice from a family
law attorney in your state immediately.
Once you're out, it's much harder to get back in.
As far as the other debts go, you seem in a hurry to pay
most of them off yourself. Your husband's vehicle loan, however, is attached to
the vehicle. Why should you pay for that? Again, talk to your family law
attorney before you part with any money to pay off marital debts. You need your
money to take care of yourself and your children. Don't try to be the nice
person and fix everything.
It sounds like you'd prefer to keep the house. That would certainly
be less disruptive to the kids. Your husband's plan of living in it until it's
taken away sounds most unfair to them, as well as to you. Does he think the teenagers
won't find out that the house is being foreclosed on and being taken away? How
unsettling is it for a kid to think that one day -- who knows when? -- they're
being kicked out of their home? It sounds like the stuff of nightmares to me.
In some cases, such a situation is unavoidable, but I certainly wouldn't call it
much of a plan.
On the other hand, if your budget as a married couple was
stretched to the limit, keeping the house long-term may not be possible. Cho
says, "As a practical matter, though, can (she) realistically afford to
pay the mortgage payments and other debts on her own? Does it make sense
financially to keep the home? She should consider the value of the home versus
the amount owed on the home. If it's underwater, it may not make sense to keep
it."
Don't be so quick to dismiss the idea of selling your house.
Houses do sell in various stages of remodel -- after all, you bought it "as is."
It's much better to stay in control of the situation by putting the house on
the market than to passively wait to be kicked out.
Your husband wants a separation -- let him leave. He can't expect
to have everything. Get legal and financial advice immediately so you can
support yourself and the kids.
These are hard times for you. I hope you can keep your home.
However that turns out, take care, and know that things will get better. Good
luck!
Sally Herigstad answers questions about credit every week for CreditCards.com. Herigstad is a certified public accountant, author and speaker. She also writes regularly for MSN Money, Interest.com, Bankrate.com and RedPlum.com, and has been a guest on Martha Stewart radio and other programs. You can read more about personal finance and download free budgeting worksheets at her website: www.sallyherigstad.com
To Her Credit answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Sally.
Published: March 18, 2011
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