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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 11-20-2008, 09:05 AM
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Default Equalization Payment

My ex and are still in the final stages of our separation agreement (final stages... been saying that for way tooo long lol).

Any how, one of the things we want to change at my request is the settling of the equalization payment. Most of this money is coming from the equity of the house and I am, for now, am keeping the house. What I wanted to do is pay her approximately 40% of the total equalization payment (of which I'd be securing through personal loans) at the time of separation and pay her the remainder in a years time or when I sell the house, which ever comes first (at 3% interest). The reason I want to do it this way is because ultimately I am not sure if I want or am able to keep the house based on my budget (things will be tight) and that I am in a relationship and we have been discussing moving in to her house. I don't want to refinance, pay penalities and have to pay them again (more the second time) if and when I sell the house. She has agreed to this.

Our mediator doesn't seem to like this idea and recommends that we settle all at once. She has not really explained her reasoning. From my understanding, I can take up to 10 years legally to pay the equalization payment.

Can anyone shed some light?

Regards,

dad6041
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Old 11-20-2008, 11:59 AM
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Just a couple of points, "dad".

1. I'm not sure what the mediator is trying to accomplish; the role of a mediator is "to endeavour to obtain an agreement between the parties". Since you apparently have an agreement, her job appears to be finished. She (?) may have her own ideas about the wisdom of the agreement, but I don't know think that's part of her role.

2. There's no absolute right to "take up to 10 years..." The law (Family Law Act, Rule 9) is that the court may order (italics mine):

c) that, if necessary to avoid hardship, an amount referred to in clause (a) be paid in instalments during a period not exceeding ten years or that payment of all or part of the amount be delayed for a period not exceeding ten years...

Don't know under what auspices you have a mediator, so can't really comment further.
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Old 11-20-2008, 08:23 PM
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Paying of in instalments...

I asked the same question to my lawyer, and the answer I got and mulled over until it made sense to me was was that it would be uncommon to do what you're suggesting.

What you're proposing to do is to hedge your bets against future contingincies, one of which involves selling your place and getting more serious in your new relationship. You also look to save some prepayment penalties (guessing not more that $5-7K).

Ask yourself if you want to continue to lay in a financial bed with your ex, or whether a clean break is better for your ex, you and your current relationship. Making that deal still allows separation wounds to fester and has the potential of getting nasty if you and your ex don't see eye to eye throught to the end of the payment plan. You may indeed have to pay a prepayment penalty, weigh that against the possible cost of future litigation and emotional bs.

I'd be making the clean break.
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