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Divorce & Family Law This forum is for discussing any of the legal issues involved in your divorce.

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  #1  
Old 09-20-2006, 12:53 PM
McBroke McBroke is offline
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Default Net Family Property questions

To: Logicvelocity or Lindsay

Hope you could give me some advice.

I have two questions about Net Family Property and want to make sure that I fill out my NFP correctly as I will be filing an amended NFP:

Background: My Ex has vehicle 1 that has a lien. There was a trailer that goes with that lien. On valuation day, my ex took vehicle 1 and left the trailer. I am the primary on the loan for the vehicle and trailer. Eight days after ex left I contacted her and asked her to assume the vehicle loan as I was unable to carry on the payments.She collected the trailer and is in possession of both vehicles now. To this day I remain on the loan. Ex has paid the monthly payments for the loan although I remain on as the primary, she is on the loan as a secondary. Her lawyer split the trailer in half(me 50%/her 50% and placed red book value on vehicle 1, but took credit for all the liability.

Applicant 50% of trailer asset
100% of vehicle asset
100% of total loan liability
Respondent 50% of trailer asset
0% of loan liability

Question:How should these items be listed asset/liability. On my NFP I put Asset with liability for valuation day.

Second Question

Vehicle 2 is a lease in my exes name with me as secondary, but I have been driving it and making all the payments. The contract was for another three years after valuation day, with a total liability of say 11,000. remaining on the contract. Can I add the liability of the remainder of the lease on my side of the ledger or just the monthly payments on my expense chart.

Question: can I list the remainder of the lease as a liability and do I have to show a value for the vehicle? I’m not really sure how to do this.

Please help.
  #2  
Old 09-27-2006, 03:18 PM
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Lindsay Lindsay is offline
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Hi McBroke,

Sorry for the delay. I had posted a reply yesterday but it got deleted on account of the server problems!

Generally speaking, NFP statements should be set up to show the situation of all accounts at the date of separation, and not how things have been managed since. So, all joint assets should be split on the statement, and all joint debts should be split on the statement. I think the best way to show how any joint accounts have been dealt with since the valuation date is to attach to your NFP statement a calculation called an adjustment to the equalization payment.

So, for the vehicle/trailer and the loan, this should be shared on the NFP statement. Let's assume that you are the party making the equalization payment. In this case, your half of the value of the vehicle/trailer would be listed as a deduction from the equalization payment and your half of the debt as an addition. If you are going to be receiving an equalization payment, the opposite would happen; 50% of the vehicle/trailer would be a deduction and the 50% of the debt would be an addition.

Your wife's lawyer should know that stating on her NFP that she is responsible for the entire debt yet having only assumed half the value of the vehicle/trailer will result in an inaccurate calculation of the parties' net family property, resulting in you owing a larger equalization payment to her (or you receiving a smaller equalization payment from her, whatever the case may be).

So to answer your question, you did the right thing. You should have 50% of the asset as at the date of separation on your side, and your wife should have 50% of the asset on hers. Same goes with the related debt.

As for the second vehicle, only if you had a car loan would this show up as a debt on your financial statement and NFP statement. Regardless, you may enter in your monthly payments towards your car loan in you expenses section in your financial statement, because car payments is an expense you incur each month. Since the vehicle is leased, the vehicle itself will not show up under the assets sections of both statements, because you do not own it.

If this was in fact a car loan, this would show up under your liabilities section. If the loan was joint, this would be split in two on your NFP statement (50% to you, 50% to your wife). In the case of it being joint, the same thing would happen as with the vehicle/trailer. Your adjustment to the equalization payment would show a reduction of $5,500.00 from the equalization payment owing since you have assumed your wife's half of the debt, or an addition of $5,500.00 owing to you, whatever the case may be.

I hope that clears things up. It sounds like you have a pretty good understanding of things.

Lindsay

Last edited by Lindsay; 09-27-2006 at 03:21 PM.
  #3  
Old 10-17-2006, 08:57 PM
McBroke McBroke is offline
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Default Thank you Lindsay

Lindsay,

I think that my exes attorney is just trying to intimidate by inflated values (deflated for her).

One more point about the lease, just to clarify, even though this is a debt ( lease contract), can it not be listed as a liability as you would a loan, liability versus asset as the lease was an obligation for 30 months past valuation day.

When I had a lawyer he advised me in the beginning that the liability goes with the asset, and since she had the van, the loan was not severable and she would therefore list the liability. That is where I get confused.

Thanks again Lindsay, it's great to have the the site back and my computer working.
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Old 10-19-2006, 02:51 PM
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Hi McBroke,

Boy I would really like to say that yes, you may list your share of the car loan as a liability, but I'm hesitant. You don't own the car, so it doesn't make sense for you to have a car loan. It's like having a mortgage without owning a house. I wish I could give you a clear answer but I'm just not sure. Maybe LV can help us out.

Assets and liabilities go with who's name is on the account. In a perfect world one could sell their house with the mortgage to be transferred to the new owner by the stroke of a pen, but unfortunately it's just not that easy!! The same thing goes for the van.. just because your wife is in possession doesn't mean creditors won't come after you if she doesn't keep up the payments. While I see where the lawyer was going, calculating NFPs this way confuses everyone, particularly the parties.

I wish I could be more helpful McBroke!
Lindsay
  #5  
Old 10-19-2006, 06:42 PM
logicalvelocity logicalvelocity is offline
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mcb,

I would think whomever 's name is on the lease is in should be listing it on their respective financial statement. If the lease isn't paid, a credit bureau will be going after the signor at the first stage and subsequently seize the asset as the asset is part of the lease agreement.

I don't agree with the method your ex's lawyer listed the trailer etc. I agree with Lindsay's method to prevent inflated numbers

Quote:
Generally speaking, NFP statements should be set up to show the situation of all accounts at the date of separation, and not how things have been managed since. So, all joint assets should be split on the statement, and all joint debts should be split on the statement. I think the best way to show how any joint accounts have been dealt with since the valuation date is to attach to your NFP statement a calculation called an adjustment to the equalization payment.

So, for the vehicle/trailer and the loan, this should be shared on the NFP statement. Let's assume that you are the party making the equalization payment. In this case, your half of the value of the vehicle/trailer would be listed as a deduction from the equalization payment and your half of the debt as an addition. If you are going to be receiving an equalization payment, the opposite would happen; 50% of the vehicle/trailer would be a deduction and the 50% of the debt would be an addition.
I think the best way is to bring it up before the Judge. Moreover, if your spouse has those items in her position, you should get your name of the respective loan. Have your spouse go out and arrange a payee of the existing loan to a loan in her name solely and also you should do the same with the other vehicle.


lv
  #6  
Old 10-22-2006, 09:57 AM
McBroke McBroke is offline
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Default Thank you Lindsay and LogicalVelocity

Thank you both for your input and I feel both your responses are very valid.The only problem I face is this; the van/camper loan and vehicles are in both parties names with me as the principal. As Lindsay suggested I have been in touch with the loan company and they have advised me that irrespective of the court they would come after me if the loan went into default, unless she sought out her own loan. The problem is I have to gift the vehicle to her (this is in my offer to settle conditional that she seek her own financing within 30 days), but I would be on the hook for the loan unless she actually did seek out her own financing(court order required for this I believe)
The leased vehicle is in her name (co-leased, she is the principle) but I am driving it, I need her to sign it over to me so I can assume the lease. She has not consented to do this.

As far as the NFP, her attorney inflates numbers and puts the leased vehicle as an asset in my name without the liability, splits the other vehicles (van/camper) as assets but not the liability, the liability is solely on her NFP, this makes it very hard to make an offer to settle, and I suspect her attorney approves of this (he makes money if we go to court). I have given her the assets ( van and camper) on her NFP as well as the liability. I have marked my vehicle as a lease (no intrinsic value), listing only the monthly expense . In my offer to settle I have stipulated the transfer of the liabilities to the parties and signing over of said vehicles to whomever is driving them to reflect the present state of use . I hope this is the right way to go.

Thanks again Lindsay and Logicalvelocity, and I will do my best to pay it forward.

Mcbroke
  #7  
Old 10-24-2006, 08:22 AM
logicalvelocity logicalvelocity is offline
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mcb,

perception is everything, and it is to your ex's advantage to appear in need on her financial statement. Keep your stance and point out the situation to the court if the matter goes that way.

lv
  #8  
Old 11-03-2006, 11:33 PM
McBroke McBroke is offline
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Default Thank you LogicalVelocity and Lindsay

Thank you once again to both of you, I am continuing to prepare for court and have posted another thread with some questions about preparation for court. I will step in and help where I think I can be of benefit for someone else.

Thank you and,
Paying it forward,
Mcbroke
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