← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
Divorce Mailbag: “Can I get my ex off the mortgage without refinancing?”
00:23:14
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- [00:02]
Karen Feinerman
Hi everyone, I'm Karen Feinerman and I'm delighted to share that we have a new season for you of my podcast, How She Does It. You may have seen me on cnbc. I'm a long term Wall street investor and a mom of four and I love taking time to sit down with dynamic women leaders and touch on all things women, money and power. This season we have Open Table CEO Debbie Sue, Today show hosts Jenna Bush Hager, author Gretchen Rubin, model and Beauty CEO Pritika Swarup, and more. You can subscribe to How She does it on Apple Podcasts and learn more@hermoney.com we'll see you soon.
- [00:39]
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- [01:10]
Jean Chatzky
Hey everyone, I'm Jean Chat Sky. Thanks so much for joining us on HerMoney for a special mailbag episode with Erin Levine of hello Divorce. If you caught my conversation earlier this week with Erin, you know she is on a mission to transform the way that we navigate separation. She's pushing back on the idea that divorce has to be devastating and devastatingly expensive. And she's working to make the process smarter, kinder, and more equitable for everyone involved. Today she's back to answer some of your questions, covering everything from filing taxes as a single parent to dealing with a shared mortgage to starting over. If you were blindsided by a divorce, if you're going through divorce thinking about one or supporting someone who is, I hope that this episode reminds you that you are not alone. Erin, we're so grateful to have you back. You ready to dive in?
- [02:06]
Erin Levine
Let's do it.
- [02:07]
Jean Chatzky
All right, our first question is from an anonymous listener, which, by the way, just a reminder, anonymous is always fine. Here at hermoney we know these things are personal. This listener is taking steps to prepare for a divorce, but she's wondering if there's anything that she's missing. And she writes, I understand the legal requirements around disclosure during divorce, but I'm hoping for some practical advice. My spouse is not a reasonable individual when held to account. And as soon as I make the decision known, things will become difficult fast. So I'm trying to prepare as much as I can before emotions Take over and communications break down. This will be a no asset divorce. We've had poor financial management which is one of the reasons for a divorce. There's no pension to fight over or savings. But we do co own a business, 51% ownership by me and I expect some difficult conversations around equipment and tax issues. So far, here's what I've tackled. Purging the house under the guise of downsizing. Selling cars to minimize maintenance and insurance cost eliminating and paying off bills and expenses held in both of our names. A storage unit, bills tied to the house. Redirecting certain business emails to him and making him the point of contact for things. I will sign over the business. When certain equipment is sold and the cash is divided. Titles to the equipment are in the business's name. They'll be stored outside of the house when the fight begins. I've also been paying off credit cards in my name. He's let many of his fall behind and go to collections. I am finally looking for a full time job to be able to leave and support myself. Given all that, what else should I be doing right now to protect myself? What would you recommend for someone without family support and what resources should I look into to build my own support system? It's a lot on her plate. First of all, for anybody going through a divorce, been there, done that. I am really sorry that you're dealing with it.
- [04:19]
Erin Levine
Yeah, it's really challenging and you're allowed to grieve the end of your marriage. Even if you're the person who's decided to file like it's. It's still a major ordeal and our heart goes out to you. But I will say, wow, you are already so ahead of the curve by doing all this strategic preparation. You have really done a lot, so there's not much more that you need to do before you file. One thing I would recommend is pulling a credit report to see if there's any surprises there and to get together any of your business financials that you can. I would think about also the strategy for how you talk to your spouse about divorce. You want to ensure that it is in a place that is quiet, that there's assuming you're safe, that there's no distractions, that it's calm, that you're clear about your intentions, which is to resolve this as collapse collaboratively as possible and then as soon as reasonably possible. Once you make the decision to divorce and give your spouse a little bit of time to adjust to what life might look like is to choose a mediator who has a financial background. So there are a ton of certified divorce financial analysts who spend a lot of time valuing businesses and helping them divide them in a way that not just assigns everyone their respective assets, but also in a way that's practical. That's the type of mediator that we want to work with, either with both of you in the same zoom room or in the same physical room, or maybe just that financial mediator who can broker a deal going back and forth between the two of you. You don't necessarily want to work with a lawyer mediator because there's a lot of important financial considerations that need to be made that most lawyers aren't necessarily trained for.
- [06:24]
Jean Chatzky
If you go the certified divorce financial analyst route, Erin, do you then need a lawyer to sign off on things?
- [06:32]
Erin Levine
You can have a lawyer at any point, but the answer is no, you don't need to. So as an example, you can use hello Divorce to automate all of your legal and your financial forms and logistics and then either file everything at that point or have a lawyer jump in to review just to give you that extra peace of mind and let you know if there's anything that they would add or might be missing.
- [06:57]
Jean Chatzky
One other follow up question on this particular case, she mentioned the credit card debt and how she was paying down her cards, but that his are a bit of a mess. Is she on the hook for that debt?
- [07:10]
Erin Levine
She is likely on the hook for a portion of that debt. I love that she's paying down credit cards. I think this is where it gets really tricky at divorce because whatever exists at the time of separation or the time of divorce is what's usually split mostly 50, 50, but not always. And if we assign your husband to pay off those debts in exchange for something else, that's where it can really impact you. Because if he doesn't pay and your name's associated with those cards, it can really hurt credit post divorce. So to the extent that there's cash in the bank, we want to pay those off or pay those down. You might even consider taking that credit card debt and paying it off so that you know it actually gets paid off in exchange for more of an interest in the business or I think, I think in this case she said she wants to sign over the business. You want to think about how can I not only pay as little on this as possible post divorce, but how do I protect my credit going forward? Because the credit card companies, they don't care what your divorce agreement says. Your divorce agreement would likely say that your spouse will take on this credit card and indemnify you, meaning hold you harmless, that it's not your credit card payments to pay. But that doesn't hold any weight when you give it to Visa or Amex or anyone else. So just know that. And to the extent you can get clear on what credit card debt is currently in your husband's name and start paying it down, that's your best bet.
- [08:52]
Jean Chatzky
Next up, we have a question from Ali. She writes, I'm delighted to share that my divorce is finalized. I'm eager to get back on my feet again. I have two minor children, though I will only be claiming one on taxes per my divorce agreement. Can you explain the benefits and any drawbacks of filing as head of household? What do you think?
- [09:13]
Erin Levine
Erin, I'm not a tax specialist. That's why I've got them on my team. But I can speak to it a little bit. First of all, I'm so glad that your agreement actually addressed who gets to claim the kids as dependents, because so often I see people forget this, number one. Number two is when it comes to head of household, you must be unmarried as of December 31st for the year that you're filing head of household, your child must live with you 51% of the year or it has to be in your court order, which in this case it is. So assuming that you meet the qualifications, that's in your court order or you have your kid for more than 51% of the year and you were unmarried as of December 31st of that year, it's usually advantageous. You can talk to an accountant or you can run different scenarios on something like a TurboTax to see what makes the most financial sense for you.
- [10:09]
Jean Chatzky
I think a tax software program is actually going to lead you in the right direction. There are different limits of things. For people who file as head of household versus married filing single and married filing jointly. There, there are different limits when it comes to the amount of money that you can earn to qualify for a Roth ira. There are different limits when it comes to various deductions and things that might get itemized. I think tax software is probably the easiest way to figure it out. But Erin is is right. If you can do it, it's usually advantageous to do it. We are going to take a very quick break. When we come back, we're going to answer a couple more questions about how to remove an ex from a mortgage and how to get financially prepared ahead of a surprise separation. Don't even know if that's possible. We'll be back. Hey, it's Jean and I've got a question for you. What's your 5 to 9 looking like these days? You know, time after work when you finally get to unwant and reset. Cozy Earth wants to make that time the most comfortable part of the day. And I can tell you from personal experience, they're doing a pretty good job. I recently tried Cozy Earth's white king size sheets made from viscose from bamboo and let me just say I get what the hype is about. We were at the beach, the AC went out. Yes, really. And somehow the sheets stayed cool. Upgrade your summer go to cozyearth.com and use code hermoney for up to 40% off best selling temperature regulating sheets, apparel and more. Trust me, you'll feel the difference the very first night. Sleep cooler Lounge Lighter Stay cozy. At hermoney we are all about making smarter choices and that doesn't stop at your budget. It also means knowing what you're cooking with. That's why we love Caraway's Non Toxic cookware and kitchen essentials. Here's a scary stat. Over 70% of the cookware sold in the United States is coated in ptfe. That's the stuff that releases toxins in just two and a half minutes of overheating. Well, no thank you. With Caraway's ceramic cookware, you're getting premium quality without the scary chemicals. If you've been eyeing their Internet famous 12 piece cookware set, now's the perfect time to buy. You can shop Caraway risk free, enjoy fast free shipping, easy returns and a 30 day trial. Plus, if you visit Carawayhomes Hermoney you can take an additional 10% off your next purchase. This deal is exclusive for our listeners, so visit carawayhome.com hermoney or use code hermoney at checkout. Caraway Non Toxic Cookware Made Modern. We are back with Erin Levine, founder of hello Divorce. Our next question Erin comes from Natalie. She writes, I'm going through a divorce and I'll be solely responsible for our home and mortgage in the immediate future. Other than a complete refi subject to new interest rates, is there any alternative to get my soon to be ex husband off the mortgage? I imagine the answer is no. But I figured I would ask and I would imagine a lot of people are asking this question just because if you bought this house when interest rates were in the threes and now interest rates are in the sevens, this is a very expensive proposition.
- [13:56]
Erin Levine
This is a question that comes up all the Time when I check in with our divorce real estate experts or I look at our home split calculator to see what people are, you know, what options they're playing with. I see this over and over and over again. So you're not alone. The first thing that I would look into is whether or not you might qualify for a loan assumption. This is where the loan is assumed. You get to keep it in your name and take your spouse off. It's rare, but it's not as rare as financial institutions want you to think. So what I mean by that is that if you ask your bank whether or not a loan assumption is possible, they will probably say no because they are not big fans of it. So what you want to do is speak to a divorce real estate expert or obtain your mortgage paperwork that you signed and look to see in there if there's anything about an assumption. There probably is. There probably is a term that says that they at least have to consider to see whether or not you qualify for one. Now, that just gives you the option to look into loan assumption. But the second piece is whether or not you can actually qualify for it. And that's where you want to speak with a divorce real estate expert to understand what are your chances for actually qualifying and how can you best position your divorce agreement terms and your own assets or debts so that you do qualify if a loan assumption doesn't work? Here's what I'm seeing people do. A lot of times they are buying some time. So they're saying to their spouse, if you stay on the mortgage another one year, two years, three years, and I'm not advocating for this. I'm just letting you know what some people have done and have worked for them. Then I'll give you an extra five, $10,000, because that will give me some time to hopefully see the interest rates go down and refi when that happens. So I see a lot of people buying more time. Some people agree to it even without that. Sometimes people are bringing in a third party. So they might not qualify for the loan on their own, but they refinance, take their spouse out and bring in a parent or a sibling or a new partner onto the loan. And of course, house deeds.
- [16:24]
Jean Chatzky
I think that's great information. And I've also seen people trying to kick the can down the road, especially if you've got kids in high school and you're trying to just get them through until the kids are out of high school, at which time it might make sense to sell the house, move somewhere smaller Maybe downsize, maybe into a less expensive school district.
- [16:42]
Erin Levine
I would just say that if, you know, in this scenario you always want to think about what if they don't like, what if you are to refi and they don't cooperate with signing off on the deed? What if there's a term that says that if you can't refi you'll sell and split the proceeds, but again they don't cooperate? What if there's no term about whether if a loan assumption doesn't go through, what you do next? So always think about what if they don't, what could happen and how would we resolve that issue as it comes up?
- [17:16]
Jean Chatzky
Such good advice. Last questions from Brittany. She writes, I was blindsided by a divorce after 10 years. I'm sorry, Britney. I've been a stay at home mom for four years. I'll be moving in with my parents until I can figure out my life. I'll be receiving a thousand a month in child support and 14,000 of our savings. I have no idea what I'm doing, but I want to be smart with this money. Any tips would be greatly appreciated while I figure out how to provide the best I can for my girl. Erin, do you want to start? I have some thoughts on this as well.
- [17:49]
Erin Levine
Oh good. I'm so glad I'll start. Brittany, we are rooting for you. I would say if it's a possibility, you might want to consider applying for public assistance. No shame, just smart. There might be something available to you. Childcare subsidies, snap, Medicaid, I don't know. But I would definitely look into that. I would explore some part time or remote or freelance work. You can even look at upwork or fiverr or something like that to rebuild your income gradually. Give yourself some grace because it's not like you get divorced and the next day you feel fabulous. It's going to take some time. I'd also like you to look at some post divorce checklists and resources that can be really helpful. And then like if it were me, and I'm not the expert, Jean, you are, I would deposit that savings, or at least a portion of it into a high yield like savings account or cd, especially until I have a plan. And if I know I can and am okay with staying with my parents for, you know, a significant period of time. But I'd love to hear what you have to say on this.
- [18:57]
Jean Chatzky
A lot of the same things that you said. I would sit down and have a really open and honest conversation with my parents and go into this new scenario truly understanding to what degree they are comfortable helping provide you with support? Is it just a roof? Are they going to be there and able to help take care of your daughter, perhaps after school hours? Are they going to be charging you rent now or in the future? What are the expectations for how long you are going to stay? That'll drive a lot of the decisions that you make going forward. Then I think you take a step back and you look at your work history and what was the last job on your resume? How can you freshen up that Resume? Maybe your LinkedIn profile? What sort of money earning opportunities are available to you and how quickly can you get yourself into them? Because $14,000 is a great start on an emergency cushion, but it's not going to be enough to get you through years and years of expenses. So just make sure that you've checked the boxes. Finally, health insurance. I want to make sure that whether it is health insurance from the state or health insurance from the exchanges that you and your daughter both have coverage because one of the things that we know is that it's the lack of health insurance that can really take a bad financial situation to a worse financial situation overnight. So I want to make sure that you're covered there. Anything to add, Erin?
- [20:46]
Erin Levine
I think that's great. Health insurance is a real big one and usually at divorce, especially if you're on, you're covered through your spouse's employment. Then when the divorce is final, you no longer have coverage. So think about whether you're covered now and if so, is that a good policy for you to continue on? And of course, if you're not, let's get you covered as soon as reasonably possible possible.
- [21:10]
Jean Chatzky
Absolutely. Erin, once again, thank you so much for being with us.
- [21:16]
Erin Levine
Oh, thank you so much for having me. It's been fun to answer these questions.
- [21:20]
Jean Chatzky
And thank you to our listeners for the questions. I know that divorce is tough from personal experience. I hope that you all come through the other side in in not just one piece, but one really, really great piece if you're considering a divorce or starting to prepare for one. Hello, divorce is offering you 10% off of any of their legal plans or certified divorce financial analyst services. Their plans range from $400 for a do it yourself option to 4,000 for a fully expert led process that includes everything from legal support to financial guidance. It's modern, affordable and built to give you clarity when you need it most. Just head to hellodivorce.com hermoney and use the code HERMONEY at checkout. That's hellodivorce.com HERMONEY and use the code hermoney at checkout. If you love today's episode, please take a moment to leave us a five star review on Apple Podcast. Your feedback means the world to me. And if you're ready to keep the money conversation going, HerMoney has three amazing programs designed to help you feel more confident and in control of your money. There's Finance Fix. It's our four week coaching program that helps you rethink your spending, find hidden savings, and make smarter choices for the future. Our pre retirement program runs for six weeks and walks you through building a retirement strategy that's personalized for your next chapter. Finally, there's Investing Fix, our investor investing club for women. It meets every other week on Zoom. It is a supportive space to learn, ask questions, grow your investing confidence and build your portfolio. And your first month is absolutely free. These programs are truly helping level the playing field for women financially. I'd love for you to join us. Her Money is produced by Haley Pascalides and our music is provided by Video Helper. Thanks so much for listening and we'll talk soon.