Marcus and Jeanette had been married for three and a half years. They were high school sweat hearts, but that relationship ended when they both went to college out of state. After college they both came home to the Atlanta area and soon thereafter rekindled their relationship. As with so many marriages, the proposal came after Jeanette learned she was pregnant. They tried to make it work, participated in marriage counseling and pastoral counseling, but ultimately they decided that it was not good for them, or their twins for them to stay married with so much tension between the two parents. They had purchased a home with a mortgage, had several joint bank accounts and credit accounts, both carried student loans of similar amounts, and each had an older, but paid for vehicle they drove on a daily basis. Both had good jobs, but Jeanette earned about $10,000.00 more per year than Marcus. The twins were in day care Monday through Friday, which cost close to $1,500.00 per month. The mortgage on the home was about $1,300.00 per month. They each carried student loan obligations in excess of $40,000.00. They were wise with the credit card accounts and for the most part paid them off on a monthly basis. They were not “wealthy” but earned enough money to make ends meet and to put a little bit away each month for retirement in 401(k) accounts, with a little bit left over.
When Marcus called me for a free consultation he had already moved out of the marital home, but continued to support the home and children financially and Jeanette allowed him to see the children on a regular basis.
Marcus’ parents had divorced when he was about thirteen years old, and it was ugly. After the divorce both of his parents filed for Bankruptcy and they lost the home he had grown up in. To this day his parents remain antagonistic to one another. Marcus did not want this to happen to him and Jeanette. Jeanette’s parents had never married, but maintained a respectful relationship that persists today. I believe that Jeanette wished that she and Marcus had never married, but they gave it a try and then both realized it was not going to work. Both parties had done some reading and research on the web regarding the issues to be resolved in a divorce case and they had discussed the matter several times.
Marcus told me when we first met that Jeanette had recently hired a lawyer and wanted to get the divorce process started. Jeanette’s lawyer contacted Marcus the day after Marcus and I spoke at my office and Marcus provided the lawyer with my contact information and she called me soon thereafter. While it is not always this way, the lawyer’s initial conversation was about the parties’ mutual intent to resolve the case by Settlement. We were off to a good start.
Both Marcus and Jeanette were salaried employees with W-2 income tax statements, and the expenses associated with day care for the twins and their health insurance coverage were common knowledge. There was little bickering about the child support calculation. The parties worked out a visitation schedule that both parents were happy with. It was a “liberal” visitation agreement in that the parties could agree to visitation whenever they wished, with the fall back position being essentially the standard visitation schedule of every other weekend from Friday after school through Sunday evening and alternating major holiday, with Marcus having Wednesday dinner time visits on his off weeks and four weeks in the summer.
Neither party sought alimony from the other and there was in fact no “at-fault” basis for the divorce so to pursue a claim for alimony would have been folly. Student loans typically stay with the parent that incurred the debt and because they each carried similar amounts and earned similar amounts of income, that issue was easily resolved by each remaining responsible for their own. Their vehicles were paid for and each kept their own. Jeanette had been able to contribute more to her 401(k) retirement account than Marcus as she had a slightly higher income. The balance in her retirement account was about $5,000.00 more than Marcus’. While both had a claim to some part of other’s 401(k) account, it was agreed that each would keep their own, but Jeanette agreed to pay off the one outstanding credit card debt of about $1,000.00 and all of the joint credit accounts were closed. The joint checking accounts were divided equally and closed. The parties agreed to each be responsible for their own attorney’s fees.
The primary difficulty in the settlement was related to the marital residence. Luckily they had purchased the home after the real estate crash, so the property value was not wildly upside down when compared to the mortgage indebtedness. But there was no accumulated equity in the property after less than three years of ownership. Jeanette wanted to keep the house, but Marcus wanted the home sold.
At this time we all agreed to consult with a real estate professional regarding a potential sale of the property. It soon became apparent that to sell the home at that time, taking into consideration some repairs that would be required to get the home ready for sale and the real estate commissions, they would have to sell the home at a loss in excess of $15,000.00, if they were lucky. They did not want to seek a Short-Sale arrangement with the mortgage lender because of the damage that would occur to their otherwise perfect credit scores.
The next step came when Jeanette contacted a mortgage broker to determine whether she could refinance the home in her own name, based on her income alone to be able to take Marcus’ name off the mortgage obligation, which if she was able to do Marcus would Quitclaim his interest in the home to Jeanette. Jeanette was not able to refinance the home at that time.
One of the primary goals in a divorce case is to sever all financial ties between the parties, except as they relate to the children. But sometimes the facts and circumstances do not allow for such, without other negative implications that may outweigh the lingering financial connection between the divorced parties. That was the case for Marcus and Jeanette.
The other attorney and I drafted a clause to the Settlement Agreement regarding the home which gave Jeanette three years to successfully refinance the mortgage and take Marcus’ name off the mortgage obligation and upon her completing that process Marcus would Quitclaim his interest in the home to Jeanette. But until that time Marcus’ name remained on the deed as a co-owner of the property. Jeanette agreed that she would notify Marcus in a timely manner if she was ever in a situation when the mortgage could not be timely paid on a monthly basis, at which time Marcus could make up the difference to keep the home current if he so chose to do, and if he did, those funds would be repaid to him by Jeanette. If Jeanette was unable to refinance the home in that time, Marcus could agree to extend the refinance period or direct that the home be sold, and if the home was to be sold, and was sold at a loss, Jeanette would be responsible for 70% of the shortfall and Marcus for 30%, which would be paid at the closing table, out of proceeds from a loan against their 401(k) accounts if necessary, in order to protect their credit scores.
The agreement was executed and the Final Order and Decree of Divorce was entered in February 2012.
Fast forward to November 2013 and two things happened in the meantime, Jeanette received a small raise of a $3,500 per year, and more importantly home values had been on the increase. By the end of the year 2013 Jeanette had successfully refinanced the mortgage, Marcus had Quitclaimed his interest in the home to Jeanette and both of their perfect credit scores remained in tact.
Marcus ended up paying approximately $3,700.00 in attorney’s fees and my understanding is that Jeanette paid her lawyer a similar amount. After the three months spent negotiating the Settlement Agreement and completing the divorce process, and the minimal expense associated with the Quitclaim deed, Marcus expressed his happiness with the process, most notably reflected in the now positive, and functional relationship he and Jeanette have as they move forward in co-parenting their two children.