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

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  #1  
Old 01-11-2014, 03:03 PM
Berner_Faith Berner_Faith is offline
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Default SS - Is this allowed?

Marriage for 9 years. At one court appearance, Judge mentioned that some sort of SS will have to be paid.

According to the incomes of each party, My support calculator, is showing a low end of $69 a month and a high amount of $804 a month for 4.5-14 years. Both parties agree that some sort of SS will be paid.

Party A is requesting $550 a month, no time frame in their offer

Party B is requesting $300 a month for 2 years, also that when SS is determined, that instead of paying the ex directly she will put it towards joint debt.

I don't know much about SS to what is a good/bad offer, but I don't believe that she can dictate how he spends the SS and joint debt should be taken care of during equalization?

What do all you gurus think? What is a fair offer and what about paying joint debt?
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Old 01-11-2014, 04:01 PM
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I would agree that joint debt is ideally handled during equalization, but it can't always work perfectly, for example, if there aren't enough assets to pay it off.

Sadly, it probably ends up being paid by the most fiscally responsible person, because the other person can goof off knowing this will be what ends up happening.

If this is likely to be the case, then the fiscally responsible person will want some sort of provision for it in the separation agreement indicating that they will take on the joint debt in exchange for not paying SS.

The other person might not go for it though.

In the above example, I would say that a better way to word the offer would be that person B assumes the joint debt, and person A agrees that this is in lieu of SS.

It will also depend on the amounts involved of course.
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Old 01-11-2014, 04:36 PM
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Agreed. You can't dictate what the recipient does with the SS, nor is there any way to enforce it should they choose not to make the payments.
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Old 01-11-2014, 05:57 PM
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Berner, you are a guru too!

And I agree with the above -- shouldn't tie payment of cs/ss to payment of debt.

Don't think Party A will agree to that, either.
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Old 01-11-2014, 06:16 PM
paris paris is offline
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My husband's agreement stated that he would pay down all of the debt instead of spousal support. He knew she would never contribute to that debt. There was a LOT of debt. I think it was for 3 years... ending when the youngest started school. He always paid over the table amounts for child support though.

Something he didn't realize at the time... he couldn't claim the debt payments as SS tax deduction. Because the money was never in her hands CRA wouldn't allow it.

I think he did well with the agreement though. Reading here what some have had to pay in SS, he got off easy.
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Old 01-11-2014, 06:48 PM
Berner_Faith Berner_Faith is offline
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I think that is the issue Party B is having. She knows Party A will not pay down the debt, or at least assumes, and wants to ensure the debt will be paid off. I biggest downfall would be not being able to claim SS, however, her credit may be more important than the tax breaks.

Doubtful Party A will agree to that. May be better off to offer a lumpsum to pay off the debt, basically allowing Party A to walk away debt free?
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Old 01-11-2014, 06:49 PM
Berner_Faith Berner_Faith is offline
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Quote:
Originally Posted by mcdreamy View Post
Berner, you are a guru too!

And I agree with the above -- shouldn't tie payment of cs/ss to payment of debt.

Don't think Party A will agree to that, either.
Thank you Mcdreamy! I don't know a ton about SS so thought I would ask!
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Old 01-12-2014, 12:15 AM
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Party B's position seems reasonable to me, as long as it's clear that what she's offering is not spousal support, it's debt payment in lieu of spousal support (and Party B would need to agree not to seek spousal support on top of this debt payment). I'm assuming these are joint debts, and Party B would be paying some of Party A's share of those debts. It should be easy enough to figure out what the tax benefit to Party B would be if she paid the same amount in spousal support, and then include this number in calculating what the debt repayment would be, so Party B doesn't end up paying more in debt repayment than she would be if the payments were SS.

The only argument against this that I can see would be that Party B is repairing her own credit by paying down the joint debt as well as repairing Party A's, so she's receiving a benefit too and this is not the same as a straight-up transfer of funds to Party A, which would benefit only the recipient. Which I think would be a pretty dumb argument, but I could imagine someone trying it on.
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