Breaking Bonds, page 17
Some states require divorcing couples to try mediation first before going to court. In theory, mediators are neutral, as they work for both the husband and the wife. If your husband is fair regarding custody and assets, mediation can be a cooperative and beneficial experience. It will not work well for you, however, if you are fearful for your physical safety, if your spouse will not compromise, if you get upset easily, or if you have difficulty standing up for yourself. Remember that the mediator’s job is to negotiate a settlement, not to be your advocate.
In my case, my husband was kept with his attorney in a separate room from the room that I was in with my attorney. Even though it creates extra expense for you, do not go into mediation without your lawyer present. Bring a complete and updated list of assets and liabilities with you along with a list of what you expect to receive. Give copies of these lists to your attorney at a meeting before mediation and right before the first mediation session starts, and tell him that you want him to fight for this settlement. Be sure to double-check it against what is included in the divorce agreement before you sign it.
Don’t forget about child support and alimony when you are indicating your important goals. Research the laws in your state ahead of time and insist that they are honored.
Be realistic in what you expect to get out of the divorce. Remember that any assets that your husband had before the marriage belong to him, so do not expect to get a part of those assets. But by the same token, do not agree to give him part of the assets you inherited or acquired before the marriage and kept as separate assets.
You might not get as much from the settlement if you signed a prenuptial agreement. Be sure that you discuss the terms of the prenup with your attorney to determine what you are entitled by law to receive. In most cases, each spouse receives 50 percent of marital assets in the divorce, although you may be entitled to more.
Some states require an equitable distribution, not an equal one. Judges have a lot of discretion in dividing property in states where the law dictates equitable distribution, as what is equitable is a subjective determination. Your judge may consider such factors as fault, the different earning capacities of the spouses, whether one spouse supported the other one while obtaining a degree, the health condition of the spouses, the length of the marriage, and separate property. Judges have biases, just like other people do, and going to trial may work in your favor, or it may not.
Your attorney should be able to give you some insight ahead of time into how the judge assigned to your case treats women. If you insist on a lot more than half of the assets, you may lose in court, so be sure to get some direction from your attorney.
Your attorney may advise you to ask for more than he or she expects you will get in the end as a negotiation strategy during the mediation. It will be vital that you get as complete an accounting as you can of all the assets immediately before going to mediation.
The attorneys at my mediation took the first several hours of mediation time just to draw up a list of the assets together. This was something that they already had, and I believe that it had no purpose other than to increase their hourly fees. Puffing up fees is not uncommon. Please make sure you avoid this tactic by insisting with your attorney ahead of time that he or she come to the meeting prepared and that you will be in mediation for two or three hours tops. Alert your attorney and the mediator that you plan to walk out after the appointed time and go to trial. Make a show of setting a timer at the start, which will be a very effective way to limit fees. I sure wish that I had done that. My outcome would have been quite different. Protect your interests.
As most divorces never go to trial, be prepared during mediation to settle. If you do go to trial, it is important to know that a judge decides most cases, not a jury. Appeals are expensive and rare. Remember during mediation that you may not get all you want if you go to trial and that it is going to be stressful and expensive.
Staying strong and being firm about what you want during mediation may be your best bet. Stay calm and be objective about the objective.
CHAPTER NINE
MONEY MATTERS
CREDIT COUNTS
“Credit is an ‘I love debt’ score.”
―DAVE RAMSEY
Before you file for divorce, obtain a credit card in your name alone. You may not be able to get credit based on your income alone, so make an application and get the card while you are still married so that you can qualify for credit based on your joint income with your spouse. As soon as you file for divorce, close any joint credit cards that have a zero balance and freeze the jointly held credit cards. You probably won’t be able to close them out completely if they still have a balance, but you can contact the credit card company and prevent any additional charges from being added to the joint debt by freezing the account.
Do not underestimate the importance of taking this step, as you are still responsible for payment of any joint debt that you or your husband incur during your marriage, even debt that your husband will ultimately be responsible for in the settlement. Credit card companies are only concerned with whether you signed for the card (and its related debt), not the terms of a court order. Document all phone calls you make to the credit card companies and send them follow-up letters requesting that the lender report to the credit agencies that each of these credit card accounts was closed at your request.
Late payments and skipped payments will adversely affect your credit score for years to come, so do your best to make sure that payments are made by the due date for any debts you or your husband have incurred while the divorce is still going on. Your credit score will affect whether you can buy a home in your name alone or if you can refinance your existing home to remove your husband’s name afterward. It also affects the rate of interest that you will be charged on any loans you apply for in the future. You need to do what you can to protect your credit score.
In many states, you may be held accountable for debts accumulated by your spouse during the marriage even until up to the day that your divorce becomes final. That’s a scary thought!
Order a credit report periodically to monitor and protect your credit. You are entitled to one free report each year from each of three major credit-reporting agencies (Experian, TransUnion, and Equifax—see Resources), so order one from each service every four months for at least two or three years after the divorce is final. Keep up this practice indefinitely to protect your credit due to credit fraud.
You may also want to use a credit-monitoring service if you are worried that your husband may borrow money in your name without your authorization. If your name is on the loan agreement and you don’t pay the loan off if he doesn’t, your credit will be adversely affected.
If your name is on a truck or car loan for a vehicle that your husband drives, insist that he pay off the loan or refinance it. That must be spelled out in the divorce decree, too, so don’t let your attorney omit it. Otherwise, you will have to make payments if he doesn’t later to avoid having the loan affect your credit score.
You will not be aware that payments haven’t been made if the overdue notices are sent to your husband’s new address. Monitor your credit after the divorce to make sure that your husband is not continuing to create new problems for you.
After the divorce, make getting out of debt a priority. Credit card debt is extremely expensive, and most people do not pay attention to how much they are paying in interest charges. Check all your credit card statements to find out the interest rate on each one. Then pay the minimum each month on the least expensive ones while you pay as much as possible on the highest interest rate card.
Stop charging on credit cards altogether until all your previous credit card debt is paid off. Some people recommend cutting up your cards, but I think that is too drastic unless you are incapable of self-discipline. If your spending is out of control, put the cards in your lockbox until you get them paid off. You need to keep good credit, so don’t cut up the cards unless you absolutely must. Simply pay them off as soon as you reasonably can. You may need to have that credit available to you if an emergency arises.
For most people, it is not necessary to have more than two cards. It makes sense to cut up cards from clothing stores and other specialty credit cards, as these are limited in scope and usually charge higher interest rates. Figure out a repayment plan so that their balance is zero within three years or less. A good rule of thumb is to pay off the credit card with the highest interest rate first while paying the minimum and a smaller extra amount on the other cards so that you don’t incur expensive late fees or adversely affect your credit rating. Keep just two credit cards for emergencies, and make small essential charges each month on at least one of them, making sure that you pay it off by the due date each month to avoid interest charges. Being careful with your credit cards will improve your credit score over time.
REGARDING BILLING
“You can’t be in debt and win. It doesn’t work.”
―DAVE RAMSEY
Find out if the utility bills for your home are in joint name or individual name.
If you are moving out of the house you share with your husband, be sure to have your name removed from these accounts, or you will continue to be financially liable to pay them. The court will look unfavorably on you for turning utilities off if your spouse is still living there, so be fair and have them transferred into his name alone if you have moved out.
If you are staying in the house, transferring the utility bills to your name alone will prevent your ex-husband from turning off service, but then you will be solely responsible for payment. Ask your attorney how to handle this as soon as possible first, in case the court orders your husband to continue to pay the utility bills. Ask your attorney to request that your husband make the checks payable to you instead of directly to the utility companies so that you can keep track of them and put the utilities in your name. If he keeps the utilities in his name and is not living at the house, he may “forget” to pay them, and you might wake up one morning without water or electricity.
If he doesn’t pay them when he’s been ordered, you will have to take him back to court, and you will have to keep paying these bills yourself in the meantime. There will also be a charge to turn the utilities back on if they get cut off, and the utility companies may now require a deposit from you. You need to hold onto your resources for other expenses.
ENSURE RESTRAINT
“Keep a diary and someday it’ll keep you”
―MAE WEST
In most states, neither you nor your spouse may conceal or destroy assets, take on substantial debt, start businesses, open each other’s mail, destroy records, cancel utilities or insurance coverage, or change beneficiaries once one of you has filed for divorce. An automatic restraining order is activated in these states as soon as the petition for divorce is filed. Make sure to discuss this issue with your attorney, to find out the law in your state, especially since there is a strong possibility that your husband will be vindictive and do things that he isn’t allowed to do by law.
Many people are either unaware or claim ignorance of the law. Do not assume that your husband ought to know the law or that his lawyer will inform him. Take responsibility yourself and inform your spouse immediately that he cannot do certain things and that you will make sure that he is held in contempt of court if he does them so that he will be unable to claim ignorance.
My ex-husband tried to cancel a valuable life insurance policy, and I had to petition the court to ensure that it wasn’t canceled, even though we lived in an automatic restraining order state. He claimed ignorance and then refused to continue paying the premiums even with a court order to do so, claiming that he could no longer afford to pay them. I had to pay them myself to ensure that the policy did not lapse. There will be times when enforcement is possible, and other times where you simply must make payments yourself to protect your family.
Do not hide assets or cancel life insurance if you want to have the judge on your side. Remember that after you file for divorce, you are not allowed to change the beneficiary on any assets until the divorce is final, either. Tell your husband yourself as soon as you file that he cannot legally cancel medical insurance and life insurance, or change beneficiaries—and do it in writing via email so that you have documentation that you gave him notice.
Also spell out that he will be required by the court to replace any medical or life insurance that he cancels, probably at a much higher cost. If he understands the consequences, he will be less likely to cause you financial harm.
Send a backup copy of the email to your attorney, so that he has proof that your husband was notified. You may also decide to back up the email by sending a printed copy of the email to your husband return-receipt requested. Because he may refuse to accept delivery of such a letter, you can ask your attorney to serve the letter to him at the same time as the divorce papers.
MUST HAVE MEDICAL
“It is health that is real wealth and not pieces of gold
and silver.”
―MAHATMA GANDHI
If you have medical insurance available to you at work, try to get your attorney to specify in the divorce decree for you to carry the children on your policy and have your ex-husband reimburse you for it rather than allowing him to carry the children on his policy. A divorce is a qualifying event that will allow you to obtain coverage yourself for you and your children on your policy at work if you haven’t done so already. Even if the coverage is more expensive than letting your ex-husband keep the children on his company policy, it is better to switch them to yours than to worry about whether he will cancel the coverage at some point in the future.
Even parents who love their children sometimes do irrational things out of spite to get back at their former spouses.
The amount of the insurance premium that your ex-husband is liable for should be added to his child support payments and garnished from his wages. If you don’t work or have access to medical insurance at work and you are worried about your husband canceling his family insurance coverage, notify your attorney to address the situation immediately. If you are not employed and your husband’s group family policy has covered you, you may apply for three years of COBRA medical insurance coverage without having to get a physical or needing to worry about pre-existing conditions. A requirement is that you file for coverage within sixty days of the divorce with the human resources department of his employer.
To retain this coverage, you must be sure to make the first payment within forty-five days of the election, even if you don’t get a bill from the insurance company. This coverage will be a lot more expensive than it has been under the group medical plan, as you will now also be paying the company’s share of the cost of the insurance. It may cost a great deal less than you would pay for medical insurance that you could find on your own, and give you better coverage than other available plans. Be sure to compare available plans.
It is unclear what type of insurance policies will be available in different states in the future. At the time of this writing, you may still be able to obtain coverage under the Affordable Care Act. Check out www.healthinsurance.org,www.affordable-health-insurance-plans.org, or the healthcare exchange in your state for information. It is impossible to predict what changes will be made by the legislature going forward on health care, so be sure to get current advice on what is available in your state.
Do your homework on costs and coverage under different options well before the divorce negotiations are finalized to make sure that you have a course of action planned for the near future. Include the amount that it is going to cost you in your budget for negotiating alimony and child support. You may need to adjust this from year to year.
COST OF LIVING
“Budgets are nothing if not statements of priorities.”
―JEFF MERKLEY
Make a detailed budget for your monthly expenses and your periodic expenses so that your attorney can determine how much alimony and child support to ask for in your divorce negotiations. Many women underestimate their monthly costs by failing to include such things as the cost of home repairs, gas and car maintenance, auto and homeowner’s insurance, health insurance deductibles and copayments, home repairs, education, unexpected expenses, state income taxes, inflation, and more. Allow for discretionary expenses as well, such as travel, birthday, and Christmas gifts—just be sure to make the amount those reasonable.
You and your ex-husband will need to come to an agreement on who pays for the children’s school tuition, music lessons, sports fees, school trips, clothes, back-to-school costs, cell phones, internet service providers, phone carriers, college search trips, gas, car insurance, and college expenses, such as books and dormitory housing.
Look at your bank account statements for at least the last year to see where the money in your household has been going. If you haven’t done so already, prepare a budget of what your expenses will likely be after the divorce based on what your joint spending patterns have been, as you will need to give this to your lawyer. Free printable budget worksheets are available online that you can revise periodically to reflect your spending accurately. Guessing is not a good idea in such a serious matter. You can get forms at: https://www.smartabout money.org/ Tools/Budget-Wizard.
Alimony is no longer tax deductible from the payer’s income and taxable to the recipient for divorce or separation agreements signed after 2018, so you will not need to take into consideration taxes on alimony payments you receive when you do your budget.
You may have to make estimated tax payments on your income now that you will be a single filer to avoid penalties. Check with your accountant to get an estimate. To avoid filing quarterly payments, you may prefer to increase your tax withholding at work.
If you earn more in annual income than your husband, you may owe him alimony and will need to factor that amount into your budget plan.
