Equalization

[GoDiegoGo]

I am trying to figure out how to calculate what the equalization payment should be.

On marriage date, Parent A and Parent B both came into the marriage with about $3k in assets and $10k in debt each.

Married 7 years.

On Separation date, Parent A and Parent B both left with about $3k each in assets (furniture,vehicle,jewellery,etc). Parent A has continued to live in the matrimonial home for 1 year now making full payments, while Parent B moved out and is renting a place.

Parent A now wants to buy out Parent B's equity in the home/equalization....

Matrimonial Home is valued at $350k and has $300k left on the mortgage.

During the marriage, a lot more debt (credit cards/loans) was acquired in:
Parent A's name: $25k
Parent B's name: $50k
Both names/joint: $20k

Based on all this, how do I calculate what Parent A should pay Parent B in order to buy out their share in the home?

Once Parent A makes the equalization payment to Parent B, what happens with the debt?

[FB_]

The NFP can be found here.

http://www.google.ca/url?sa=t&rct=j&...57316858,d.aWM

On a very simple level.

Value of Proerty owned on valudation date (Total 1)
Value of Debts and other liabilites on valuation date (Total 2)
Net Value of property owned on date of Marriage (Total 3)
Value of excluded property (Total 4)

Total 5 = Total 2 + 3 + 4.

Total 6 = Total 1 - Total 5

The difference between two Total 6 numbers is divided / 2 and gives you the equalization payment.

[GoDiegoGo]

I've read so much on this, and it really is confusing. I'm probably making it harder than it should be, but I'm having a tough time trying to figure out what it all means.

What is the asset amount for the home.... it's value, or the equity. How do you handle debt when it's in our names or joint...

From what I see, if we sold the matrimonial home for $350k, there would be $21k in realtor fees and $300k still owing on the mortgage.... leaving about $29k in equity (unless I'm leaving something out).

Debt is in different names, but all aquired during marriage, so would it just all be added up and divided by 2, or are we only responsible for the debt in our name and joint.
I have $25k, she has $50k, and $20k in joint names. Total $95k in debt. Half would be $47,500 each.

Therefore based on this, is it....
47,500 (half of debt) - 14,500 (half the equity) = $33,000.

If I paid her an equalization payment of $33k, then I would own the house, but she would own the debt?

Because we owe so much, I'm not sure how it works with equalization. I don't believe we're even allowed to assume joint debt, as the banks want both names to go after.

We obviously have some equity in the home, but it would all go towards debt, and we would still owe so much...

[NBDad]

This is one of those oddball issues where your net worth is technically a negative.

Asset amount of the house is the appraised value (350K)

The amount owed on the mortgage would be considered a joint debt. (or at least a debt owing against the value of the home)

Personally you may want to offer something similar to:

350K (house value) - 300K mortgage (owed) -20K (joint debts) = 30K

Divide /2 = 15K

Offer her between 10 and 15K to sign over the house and walk away.

Assuming the bank will allow you to refinance on your own. You keep your debt, she keeps hers. Joint debt is cleared as part of the refinancing.

You will easily spend that in legal fees fighting it out anyway.

[GoDiegoGo]

I can see issues coming from the debt. If we only deal with the joint debt ($20k), then I would still be left with $25k and my ex would be stuck with $50k. I would offer $10/15k for the home, but she would still be far in debt.

Since she would probably have to file for bankruptcy regardless, she could file for it now, stick me with 100% of the debt, and still walk away with nothing.... screwing me in the process.

[NBDad]

If she did that, you'd be no further ahead or behind and she'd be out 10-15K.
They can't come after YOU for debt in HER name (unless you co-signed it)

So realistically what would her going bankrupt do? Stick you with the mortgage and the joint debts. Joint debts will still have to be cleared, even if she bankrupts out of them herself, they'd still be joint amounts owed on the balance sheet and you would then argue to have them cleared as part of equalization.

End result is no change, other than you would then not offer her anything, so she'd be out 10-15K.