The Men’s Room: Paying off Debt before Divorce
Don’t Be a Good Guy and Pay Off Credit Card Debt before You Get Divorced
When it comes to strategy most men are really good at figuring out when to hold a poker hand or call a Hail Mary in football. We spend hours talking about what works, what doesn’t and why. Men can spend all afternoon on a boat, with a six pack, talking about how to beat the casinos in Vegas, but when it comes to planning a divorce they clam up and won’t talk to their buddies about what’s is really going on in their marriage. What few instincts we have in this area are usually wrong. A man will tend to do what he thinks is the “right thing” to do, and frequently it is the completely wrong thing to do when you are faced with a divorce.
A common occurrence among the men who come to our office is that they have just paid off all the family debt. Sometimes they have refinanced their home and used an equity line on their home to get a lower interest rate on their credit card debt, and paid off their soon to be ex-wife’s credit cards. These are good things to do if you are planning on staying married, but they are huge mistakes when it comes to the strategy of planning for a divorce.
Debt, like assets, must be divided equally upon a divorce. For a man, who is usually the bigger earner, this is a strong piece of leverage to be used. Think of a divorce like a game of chess. You are the king, and you need to be protected. She is the queen, and like the chess queen, she can be unpredictable in what she can and will do. You need to have pieces in your army to win.
Consider child custody to be like the rook, it only goes two ways, between you and her. Spousal support is like the bishop, it can go as far as the board will allow it. The assets and debts are like pawns, they can only go one way unless they are attacking, but there’s a lot of them, and sometimes you have to sacrifice one to save a bigger, more valuable piece.
But if you pay off all the debt, you’re removing pawns, which you might need later to protect your Bishop. If the husband takes half the debt, but he makes 25% more than his soon to be ex, he can demand half the assets, and since he makes more, will be ahead of the game, because he can pay off the debt faster than she can. This way he ends up with more in the long run.
If you pay off the debt while you are still married, or at the pre-filing stage, you are paying it with community property and she doesn’t have to re-pay her half with her own funds. The court will not look upon you as a “good guy” because you paid off the debt early, and give you a bigger share of the assets; it will just split the assets in half, and she’ll be laughing all the way to the bank.