The 4 Keys to Repairing Credit after Divorce

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If your credit has been damaged during your marriage, expect to take some time to repair it. The first step, of course, is to obtain a credit report. You can receive one free report each year from a free report agency, or check with your bank. Assess your situation and then make a plan of action. There are four key steps to repairing your credit: close current joint accounts, restructure your debt, develop a budget, and take positive steps to repair the damage.

Close

The first step is to close all joint accounts. Officially call the companies or banks and close the accounts. Some institutions may require your spouse to also call or sign. Make sure you document your efforts, and if your spouse delays, document that, too. Keep copies of statements in case your spouse decides to go on a wild shopping spree before closing the joint account. In settlement, the judge may award a larger portion of the debt to the spouse if there is clear evidence of an attempt to burden you with more debt.  Obviously, keep official proof that the account has been closed. If your spouse is handling this aspect, make sure you have copies as well.

Restructure

The joint debt remains the responsibility of both of you until it is paid off. Restructuring the debt by transferring a portion of the balance to an account in just your name or refinancing in some other way will separate the expenses – assuming your ex does this as well. If a portion of the debt remains in both your names, you will remain jointly responsible for it, at least until a clear judgment is made by the courts. So try, as much as possible, to get an agreement from your spouse to split the bills.

If you’re selling a house, you could use a portion of the sale to pay off any joint debt before distribution of the balance. This will leave a smaller payoff, of course, but will give you both a clean slate with which to start your new lives apart.

If the above options are not possible, try to split the responsibilities evenly, and get it in writing. For instance, if you offer to pay loan A and he or she is to pay loan B, get it in writing. If your ex doesn’t pay and the bill collectors come after you, you will have proof of divided responsibility and will be able to go to court for payment enforcement.

Budget

Now that you know how much you have to pay, take a close look at your income and expenses, including repaying debt. Create a budget and stick to it. If you don’t have much experience with budgeting, or if it looks like you don’t have enough income to cover your necessities, find a trustworthy credit counselor who can help you make good financial changes.

Repair

It’s time to open some accounts in your own name. If you changed your name when you married and you want to change it back, do so before opening the new accounts. If your credit is bad, you may need to open a secured card. With a secured card, you put forward a certain amount of money and then you are able to borrow against that money and pay it back at the end of each month. By paying bills on time over a period of months and by not taking out new loans for a while, your credit score will begin to improve. As it improves, you will be able to get a normal credit card, close the secured card, and get your down payment back.

When going through a divorce, it’s important to have a team to help you. Besides having moral support, choose trusted advisors for credit, tax, and legal advice. With financial and legal guidance and emotional support, you can get through this and be stronger on the other side.

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Divorce and Your Taxes

A change in marital status means many changes to your tax situation. It’s important to inform the IRS of these changes and review the effects of your different options in order to get the most beneficial tax results.

If you have changed your legal address, the IRS has to be officially informed by filing Form 8822. If you change your name, you need to inform the Social Security Administration, using Form SS-5.

To avoid withholding too much or too little from your paychecks now that your family size and/or family income has changed, ask your HR department for a new W-4 form and make the necessary changes.

Filing Status

There are five tax-filing statuses: single, married filing jointly, married filing separately, head of household, and qualified widow(er) with dependent child. While the last option is not available to you, which of the other options you use depends on multiple variables.

The IRS considers your marital status as of midnight on December 31. If your divorce was finalized on December 30, you cannot file with either of the “married” options. If you don’t get divorced until January 1, you cannot file as “single,” even if you did not live together, because you were still married as of December 31.

If, however, you were separated for more than six months, you were paying the majority of household expenses, and you have at least one dependent, you can file as “head of household.”

Before determining your tax filing status, consider the tax effects of each of your options. While married filing jointly has a higher standard deduction, you are then both liable for whatever taxes are incurred. If your income is significantly lower than your spouse’s, you may be better off filing as married filing separately or as head of household, if that is an option. Remember, however, you cannot file as single if you are still legally married on December 31.

Claiming Dependents

If the divorce decree does not dictate who claims the children, the IRS rules that the parent with whom the children stay for the majority of the year (usually the custodial parent) can claim them as dependents. In the unlikely event that they stay with each parent the exact number of days in a year, the parent with the higher adjusted gross income can claim them.

The parent who claims the children is then eligible for other tax benefits: an increase in Earned Income Credit, possible Child Tax Credit, Child and Dependent Care Credit, and educational or medical deductions.

Alimony and Child Support

Child support is neither tax deductible by the payer nor needs to be reported by the receiver. The thought is that if the parents had not divorced, they would be paying for their children’s food, clothing, and housing, none of which is tax deductible, therefore child support is not tax deductible.

Alimony is handled differently, depending on whether your divorce took place before or after December 31, 2018.


For divorces prior to 12/31/18, the payer is able to deduct alimony from taxable income, and the receiver has to report the alimony as taxable income. For divorces after 12/31/18, the payer may not deduct alimony from taxable income, and the receiver does not report the alimony as taxable income.

This significant change is due to the Tax Cuts and Jobs Act, which went into effect for alimony as of January 1, 2019. Divorces prior to that date are grandfathered into the old tax law unless modifications are made to the divorce agreement.

 

Given the many changes that can take place in the first year or two after divorce, it’s best to work with a tax advisor who is familiar with the tax challenges associated with divorce. A good divorce lawyer should be able to recommend a tax professional who can help you.


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Modifying Your Divorce Agreement

While an appeal to a divorce decree must be completed within 30 days, a modification to a divorce agreement can be requested at any time after the divorce. It is not uncommon that, after significant time has passed, circumstances have changed enough to warrant an alteration of the divorce agreement.

If both spouses agree to the changes, the process is fairly simple. The agreement must be in writing and submitted to the court in which the divorce decree was issued. Sometimes there is a hearing to ensure that both parties truly agree, then the judge signs off on the agreement and it becomes a court order. Working together with your lawyer to ensure the divorce agreement is written properly is the easiest and best way to make changes to a divorce agreement.

However, sometimes former spouses cannot agree. In this case, the person who wants the modification must file a motion for modification with the court that issued the divorce and serve it on the other spouse. Getting a modification from a court is not easy because you will have to present proof of significant, long-term, or permanent changes that justify the modification.

Courts rarely modify property or debt distributions in the original divorce agreement, but changes to spousal and child support and changes to custody and visitation are not uncommon. Where children are involved, the person seeking modification must prove that the change is in the best interest of the child.

Reasons for modification of support

A significant change in income is often grounds for modification, whether you are the payer or the receiver. If the payer gets a significantly higher paying position, the receiver may request more spousal or child support. Additionally, if the receiver loses a job, more support could be requested.

Conversely, if the payer loses a job or gets a significantly lower-paying job, the payer can request a decrease in the amount of support paid. This is also true if the payer has more children with a new spouse, demonstrating a need to support other children. One caveat: A parent cannot purposely take a lower-paying job in order to request a change in support. This may be difficult to prove, but if suspected, it could be considered contempt of court.

In the case of child support, the receiver may demonstrate a significant change in the child’s health or condition to warrant an increase in support or the payer may demonstrate that the child now needs less support. In these cases, courts will keep in mind the best interests of the child.

Reasons for modification of custody or visitation

A change in the condition of parents or children can justify a request for modification.

If one parent was ill-fit for joint or sole custody at the time of the divorce and can now prove he or she is fit, a case for modification may be made. However, a formerly unfit parent cannot demand sole custody if the parent who currently has sole custody is still a fit parent.

If a parent who has sole or joint custody becomes unfit, or if any child abuse or substance abuse can be demonstrated, custody provisions can be modified, keeping in mind the best interests of the child.

If your child is spending more time with you than is listed in the custody agreement, you may wish to modify the agreement so that you can legally protect this precious time together. The additional time also means an increase in child expenses on your part, suggesting a need to modify support as well.

Your next steps

In any of these situations, you will need to show significant evidence in order to convince the court to change the agreement. Laws that govern the standards to be met in each case vary from state to state, so be sure to talk to a lawyer who is expert in the divorce laws of the state in which your divorce was issued. We here at Ulmer are experts in Pennsylvania law. Reach out to us to see how we can help you.


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Overcoming the Stress of Divorce

Stress after divorce is to be expected. You’re embarking on a new stage of your life, but things will be different socially, emotionally, and financially. Looking at the big picture can cause anxiety, but by allowing yourself time to adjust and by taking things one at a time, you can manage the stress and anxiety and come out stronger on the other end.

It’s important, first of all, to allow yourself to feel many different emotions. Do not try to bottle them up. And give yourself time to perform at less than full capacity. You may be juggling new responsibilities, or the feelings themselves may be slowing you down. It’s okay. Don’t worry about what others may think of you, everyone has a different way of coping.

Don’t go through this alone, though. It’s important to have the strong social support of friends or family with whom you can share your feelings and who make you feel better. You may also need to reach out to a support group or professional counselor, especially one who is an expert in helping people adjust after divorce.

Keep yourself physically healthy. Exercise and a good diet improve your mental and emotional health. Get involved in activities you enjoy, indulge in hobbies to lift your spirits.

Positive self-talk is crucial. Don’t blame yourself for past mistakes, real or imagined. Focus on a better future. Understand that you can’t control everything, but you can control some things. Write down everything that worries you and brainstorm solutions. Friends may also have ideas. If there are some concrete things you can do to improve the situation, take one challenge at a time, and celebrate your progress.

Financial concerns can be a major stressor. If your spouse handled most of the finances, you’ll need to learn how to do so now. A financial professional can help you make a budget and suggest ways to improve your financial situation. If necessary, look into further professional training in order to get a job that will bring in more money.

If you have children, you’ll be understandably concerned about them. Give them extra attention and make sure they know they can rely on you. But they also need consistent routine and clear discipline, giving them structure and security during this insecure time.

After your divorce, things will be different, but they can still be good – maybe even better. By focusing on your emotional health, you will be able to cope better and also help your children cope. A good divorce lawyer should be able to refer you to appropriate support services. At Ulmer Law, we are committed to helping our clients not only get the best settlement but move beyond their divorce with the best possible future before them. Call us for a consultation.

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Unearthing hidden assets: Signs your spouse may not be honest

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Some people going through a divorce in New Jersey may attempt to hide assets to prevent a spouse from receiving them in the split.

Any divorce in New Jersey presents a myriad of decisions that must be made: perhaps it has to do with how property may be divided or who will have custody of the children. Though the details of each case may differ, there is one constant: each party should be honest in disclosing any information that would be pertinent to making these decisions.

In fact, New Jersey laws require parties to complete and submit a “family case information statement” within a timeframe set by the court. The statement details family information, employment and income.

When it comes to property division, having a complete picture of each spouse’s assets is critical to ensuring the equitable distribution of those assets. Unfortunately, some people attempt to obscure items in an effort to prevent the loss of them. Here are some signs that this may be occurring:

Large purchases

Cash tends to be king, as it has a concrete value and is easily divided. However, cash is easily spent. When one spouse starts making large purchases – such as with expensive artwork, cars or taking big trips – it may be in an effort to prevent the other spouse from getting that cash. In other words, the cash is being converted into physical assets – and the spouse could even attempt to underreport the actual value of those assets.

Another way to minimize the amount of cash available in a divorce is to overpay a credit card or other debt. Perhaps one spouse decides to start putting extra money into the house payment. Sometimes, people create “fake” debts, such as money owed to a friend, in order to “pay off” the debt so the person essentially holds on to the cash until the divorce is final. This should raise a red flag.

Questionable statements

It is always critical to monitor statements from credit card companies and investments. But what happens if those statements suddenly go missing? Or perhaps have unexpected transactions on them? It could indicate that a spouse is trying to keep his or her other half from accessing assets.

People going through a divorce should also keep an eye out for new statements from banks or credit card companies that may be new. While it is not illegal for someone to open a new account during this time, it is essential that they disclose that information during the divorce proceedings.

Underreported income

Even with the financial disclosure statement is submitted, both parties should thoroughly review it for accuracy. Some people may try to underreport what they make. Though a W-2 or other tax form could easily dispute this, it is not always as easy with people who are paid in cash.

Uncovering assets

Fortunately, with a little work, these hidden assets may be uncovered. Experts suggest hiring a forensic accountant or other specialist who can do a deep dive into a couple’s assets. This process may require providing names, addresses and Social Security numbers of family members.

Anyone who has concerns about this issue should speak with a family law attorney in New Jersey.

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What If Your Ex Hid Money During the Divorce?

While the law requires both spouses to disclose all assets and liabilities with an accurate estimation of value for distribution between spouses, it’s not uncommon for someone to try to hide the actual worth of their property.

This is, of course, illegal. But if the lie isn’t caught, the lying spouse gets to keep more of his or her money. The other spouse thus gets less money at settlement and also possibly less child support or alimony.

Common ways to hide property

There are many creative ways to hide money from your spouse, and those of us who have been in divorce law for a number of years have seen some surprising schemes. But most people try one or more of the following:

  • Transferring real estate or other property into the name of a friend or family member
  • Making large purchases to resell at a premium after the divorce
  • Asking friends or family to hold onto valuables like art or jewelry, to be collected after the divorce
  • Hiding cash away, either under the proverbial mattress or in an account or box in someone else’s name – via a large cash withdrawal from a joint account, many small withdrawals over a period of time, or unreported income from a cash business
  • Deflating one’s income. A self-employed person can easily do this with creative bookkeeping, or a boss might agree to a temporary demotion or false reporting. The spouse might also add more to the 401K or inflate withholdings
  • Postponing of income until after the divorce. This could be by asking the boss to delay a bonus or by not submitting reimbursement reports in a timely manner
  • Depositing and then withdrawing money from children’s custodial accounts
  • Paying off phony debts to a friend or family member
  • Understating the value of property
  • Hiding money or property offshore
  • Overstating debts

What to do if you suspect dishonesty

It’s best to catch this sort of illegal behavior during the divorce proceedings, because the spouse who suspects cheating can petition the court to subpoena the employer for all employee records as well as the banks for all their information.  After the divorce, it is difficult to reopen the case, especially in equitable distribution states, such as Pennsylvania and New Jersey.

But if the divorce is final and you have recently found out your ex lied to you and to the court, don’t despair. Contact an experienced divorce lawyer. Your lawyer will help you construct as strong a case as possible. You may have to hire a private investigator and/or a forensic accountant. The investigator may use surveillance and online research to uncover evidence of fraud, while the forensic accountant will scrutinize any documentation available, looking into unexpected corners to uncover what’s been hidden.

There can be stiff penalties for hiding property in a divorce case. If you’re thinking of doing it, don’t. But if you suspect your ex undervalued his/her worth, talk to one of our experts to see what we can do to help you.

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The Effects of Divorce on Men and Women

Divorce affects every aspect of a person’s life: economic, physical, emotional, and social. Men and women experience these changes differently, however. If you are divorcing, it’s best to know what to expect so you can develop a strategy that will help you through the process with the least harm to your health and well-being.

Economic

It’s probably no surprise that women tend to fare worse economically after a divorce than men do. Since often women are awarded custody of the children, they make career decisions centered around the care of the children. Women often do not pursue career advancement and may even choose lower-paying jobs with more flexibility so they will be more available for the children. They also have many expenses associated with child-rearing, and although settlements are supposed to consider these factors, they rarely compensate sufficiently, nor do they consider the mother’s decreased earnings potential. Divorce is a major factor in the slip into poverty for many women and children.

Conversely, the husband’s economic position usually improves upon divorce, because he has fewer financial responsibilities and does not have to make career decisions based on child-rearing limitations. However, studies show that this is the only way in which men fare better than women in divorce. In all other areas, women fare better.

Physical

Divorced men have a higher mortality rate than married men or divorced women, and have a greater decline in health than both. Since wives often encourage their husbands to engage in healthy choices of food and activity, divorced men, now without wives to encourage them and with the increased stress of divorce, may fall into bad eating patterns, gain weight, turn to alcohol and drugs, and have increased incidence of heart attacks and stroke.

Emotional

Wives tend to make close relationships outside their home, while husbands usually just socialize with their wives. For this reason, when divorce happens, the wife has friends and family to turn to, while the husband often feels very isolated.

Women are also more likely to seek emotional or psychological support from friends or professional counselors to help them through the grief or anger of divorce. Men, however, are more likely to skip the grieving process and internalize their pain. Men, in general, are less likely to discuss their feelings, and when they do, they usually just talk to their wives. Divorced men no longer have that support. To cope, they may turn to alcohol or drugs.

Divorced men report a lower sense of well-being after divorce and are more likely to have thoughts of suicide than divorced women are.

Social

Because men are lonely and skip the grieving process, they jump into new relationships faster than women do. Women take the time to understand their feelings and often evaluate what went wrong. They don’t rush into new relationships and they make better choices than men do, which often results in staying single. Men remarry more often, but second marriages have an even higher divorce rate than first marriages.

Divorced mothers feel more fulfilled in their motherhood than divorced fathers feel in their fatherhood. Since fathers usually do not get full custody, they miss their children. They miss the sporting events, the school events, even helping with homework. And since they are not as adept at communication as women are, they’re less likely to pick up the phone, talk to the kids, and ask them how their day was. This causes even more drifting apart, which further damages the man’s emotional and physical health.

Limiting the negative effects

If you cannot reconcile your differences and are on the path to divorce, consider closely the possible effects of the divorce on your life, your spouse’s life, and the lives of your children. Try to create a plan together to avoid as much pain as possible. Talk to your divorce attorney. We deal with these situations frequently and may be able to help handle the procedure and settlement in a way that will avoid many of these negative consequences for you and your family.

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College Scholarships and Divorce – Who Has to Pay?

We wrote a recent blog about children’s student loans and divorce. But what about children’s scholarships? How are those handled?  

Unlike other states, parents in PA do not have a financial obligation to pay college tuition.  However, to reduce conflict, you may want to negotiate tuition payments as part of your divorce process.  The effect of scholarships on college costs should be part of the negotiations before settlement. A “motion to modify” can be filed afterwards, but this can be a difficult and time-consuming process, so it is best if all contingencies are considered before the divorce is settled. Here we will consider several possible scenarios.

GI Bill

A parent who has been in the military is able to transfer his or her Post 9/11 GI Bill benefits to a spouse or child, under certain circumstances. If the military person is the father, for instance, he may negotiate that this will cover his portion of college expenses for several children, or perhaps decrease child support payments. But since the transfer can be revoked at any time while he is still on active duty, a settlement or final judgment must either prohibit the revoking of the transfer or provide for compensation in the way of payment, alimony, or another benefit of equal or greater value.

Parent works for a university

Universitites often offer significant tuition discounts to their employees’ children. This should also be part of the settlement. Contingencies must also be included in case the parent leaves the university, changes universities, or the child does not wish to attend that university where their parent works. In these cases, what is each parent’s responsibility? And will the discount reduce just that parent’s educational responsibilities, or will the benefits be spread between the two parents? These and other questions need to be considered and answered in the settlement.

Other scholarships

Additional scholarships are available as well, including many scholarships for the children of divorced parents. The divorcing couple needs to decide how this will impact the final amount each one is responsible for. If one parent works diligently with the child to find as many scholarships as possible and the other parent does nothing, do the scholarships benefit just the parent who worked so hard or do they reduce the responsibility of both parents?

There are no set laws regarding division of the benefits of scholarships, therefore this needs to be carefully reviewed and defined in the divorce settlement. We at Ulmer Law have extensive experience helping parents navigate all the intricate details involved in creating a settlement that provides for their children as best they can while covering their own assets. Contact us for a consultation.


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If Your Spouse Won’t Agree to a Divorce in Pennsylvania

Pennsylvania is unusual among states in that it still has both no-fault and fault divorce options on the books. The many issues regarding divorce in PA are defined in Pennsylvania Statutes Title 23 Pa.C.S.A. Domestic Relations, Part IV.

Uncontested Divorce

There are two no-fault, or uncontested, options: Mutual Consent and Irretrievable Breakdown.

Mutual Consent: In Mutual Consent Divorce, both spouses file affidavits requesting a divorce. There is a 90-day minimum waiting period, and then if they still both agree, the divorce can be finalized.

Irretrievable Breakdown: When a marriage has severely deteriorated, under the “irretrievably broken” grounds for divorce, spouses must live “separate and apart for a period of at least one year.” After separation, only one party needs to file an affidavit, indicating the date at which the separation began and that the marriage is “irretrievably broken.” The affidavit must be filed in court and served to the spouse, who has 40 days to contest or to argue for economic relief. If the served spouse does not respond in time, the divorce can be finalized by only one party.

Contested Divorce

Pennsylvania Law cannot force a spouse to sign divorce papers. If a spouse contests the divorce or denies separation, then the other spouse may be forced to file a “fault” divorce. The grounds under which such a claim can be made in Pennsylvania are defined in 23 Pa.C.S. § 3301(a) and (b):

1.       Willful and malicious desertion

2.       Adultery

3.       Cruel and barbarous treatment, endangering life or health of injured and innocent spouse

4.       Bigamy

5.       Imprisonment for more than 2 years

6.       Intolerable and burdensome indignities to spouse

7.       Institutionalization in a mental institution at least 18 months prior to and

expected subsequent to filing

If your spouse will not leave the family home and thus initiate the separation, under 23 Pa.C.S. § 3502(c)  you can file for exclusive possession of the family home.

Talk to a trusted advisor who is an expert in divorce and family law to help determine what steps you need to take. We help people every day to get through this difficult process and start fresh. Call us for a consultation.


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Shared Accounts and your Divorce

Digital technology has advanced at such a rapid pace and has permeated so many aspects of our lives that you don’t realize how many ways you’re dependent on it until you have to separate your digital world from the partner with whom you’ve shared it.

Chances are, you’ve disclosed much or all of your personal information to your spouse, and you two have many shared accounts. You need to do several things, ASAP.

  • Change the passwords on your personal accounts, and choose more unusual identifying questions. Your spouse probably knows your mother’s maiden name or the street you grew up on. Destroy any password lists you may have made, whether on your computer or on paper.
  • On accounts that you share but can easily be divided, create your own separate accounts or remove your spouse’s ability to access them.
  • On accounts that you may need to continue to share, set up separate access information. List shared accounts that primarily belong to your spouse or that may have monetary value and give it your attorney. If your spouse locks you out and you feel you should have access, your attorney will have the necessary information.
  • Transfer your own sensitive data from your home computer and shared gadgets, then permanently delete it. You may need to wipe those files from the machine. If you must continue to use that machine, create your own personal username and keep the password secret.
  • Secure your gadgets and those of your children, if you have custody. Remember, whatever your children have access to, your spouse may also have access to, especially when they are visiting. Make sure there are no spy apps or keyloggers on your gadgets, and turn off the “Find My Friends” tracking system. You can also back up all of your information on your gadget and do a full factory reset.  
  • If you’re connected with your ex on any of your social media accounts and you don’t want him or her to see your accounts anymore, make sure you block him or her.

Here is a partial list of the kinds of digital shared accounts you may need to consider:

 

  • Financial accounts, such as bank, credit card, investment, taxes, and retirement accounts (You may need to talk to an attorney about how to handle these.)
  • Insurance accounts (home, car, life, medical)
  • Access to your children’s schools’ parent portals or student portals
  • Medical records
  • Online storage, such as iCloud, Google docs, iTunes, photo storage, computer backup accounts
  • Online rewards, such as frequent flyer miles or credit card points Online entertainment services, such as Netflix, Hulu, ebooks on Kindle, etc.
  • Family email and social media accounts
  • Shared household accounts, such as phone service, amazon account, food delivery service, and any other services with whom you’ve contracted
  • Google calendar
  • Virtual property

Again, this is only a partial list. We try to go over the most common shared accounts with our clients and encourage quick action, but look closely at your digital activity and try to find all the ways you use digital space. Take action on those joint accounts that are clearly yours, and talk to us about the best way to handle the rest.


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