Like most routine household chores, there’s usually one spouse who takes responsibility for managing the household finances. It makes sense but it’s important for the other spouse to stay informed. That doesn’t always happen especially when one spouse deliberately acts to conceal reality.
My current guest, Candi was married for thirty-five years and during that time her husband handled their finances and taxes. Going through the divorce process, Candi discovered that they owed a substantial amount in back taxes and that her husband hadn’t been paying the mortgage. Here’s Candi:
Our house is in the process of foreclosure. There’s no way that we could live separate lives under the same roof. He’s not capable of doing that and I’ve heard of people that do that too, but that was not a possibility for us. So, I had to leave and I found out just before I left that he hadn’t paid the mortgage in over a year.
He hid all of that paperwork from me and shortly after our first separation I found out that we had been audited by the IRS for three years: 2008, 2009 and 2010. Because I went to work everyday and he’s self-employed and at home in the morning, he was getting the mail and I never saw any of that paperwork come from the IRS.
One day I came home from work and he said to me, “I have some bad news for you,” and I said, “What?” He said, “We have been audited by the IRS.” I said, “We have?” I thought it was something that we were just notified of that day. He said, “Yes, and I’ve been meeting with them over the last few months and now it’s all settled and they’ve determined how much we owe and you need to sign this paperwork.” He then handed me paperwork saying that we jointly owed the IRS $43,000. He had been having meetings with the IRS agents and everything for months and told me nothing. I knew nothing about it and all of this was because he didn’t pay the correct amount of taxes on his business.
The first thing I did after just falling apart was get a tax attorney. It took a year for that, which was another reason why it took me about a year to leave. It took a year for that case to be settled. We petitioned the IRS to have me removed from that judgment under “innocent spouse relief,” because I had no idea that he was underpaying the way that he was. And it was granted. It could have gone either way. The attorney said seventy percent of the time they don’t grant that and 30 percent of the time they do. But we took a shot, because it was the only shot I had.
He didn’t get a paycheck, I do. So, if I didn’t get out from underneath that the IRS would have garnished my paycheck and I would have been stuck with him until that $43,000 was paid off.
Luckily they granted the innocent spouse relief. So, once they granted it, it was April 2012. I moved out in July. It took me four months and I was out.
After that I found out he hadn’t been paying on the house. He had a truck that both of our names are on. He bought it for his business, but he owed $40,000 on it and he hadn’t been paying that. That was repossessed. Then, we had both of our cars that were financed and he was having trouble paying mine until I moved back home and then after that it was paid off. But the house right now is in foreclosure, because he moved out about three months after me. They would auction it off. Although, it’s been over a year now and they still haven’t done anything. It was a severe amount of debt.
I asked him when we were driving up to New York to see our daughter, what was happening with the IRS. He said that he’s on a three year hold right now, because he went in and showed that he wasn’t making enough money to start paying that debt back. He said he’s going to keep doing that probably until he dies. I don’t know. He doesn’t have any intention of ever paying it. Yeah, he is extremely financially irresponsible.
There’s always less money after divorce and discovering that you have significantly more debts than you thought or that you’re close to being bankrupt is devastating. The first action is for you to learn the truth about your finances. One way to do this is to get a copy of your credit report. I recommend this for anyone preparing for divorce.
Your credit report will tell you all the accounts that are held in your name either individually or jointly with another person. You’ll want to review this report, make sure you know about each of the accounts and that the balance is what you expected. You’ll need to research anything you don’t recognize. You can start by contacting the institution and their contact information will be on the report.
Whether you confront your spouse at this stage is something that you’ll have to consider very carefully. It depends on your situation and what you think their reaction will be. My biggest concern is that they would react by cutting off your access to all joint accounts and credit cards so then you have no access to funds.
Next, consider getting professional help either from an attorney or a debt counselling service like Care One Debt Relief Services (Affiliate). It’s important that you get competent advice about securing access to your accounts and whether you can dispute any withdrawals as fraudulent. If you or your spouse has filed for divorce there may be legal orders in place that bar you from making changes to accounts. This is why you need professional help.
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