Dear Moneyist,
My husband is a divorced father of three dependents. We will soon be married for 10 years. We filed joint tax returns the first 5 years. However, after learning that my husband was in trouble with back taxes I quickly moved to filing separately. I already filed bankruptcy with him in 2012 and sacrificed my credit for the cause, but I’ve been able to show excellent credit worthiness and currently show a FICO score of 645.
If I could just learn how to move the chess pieces on the board correctly, I could get us out of the mess my husband has caused.
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I am self employed as a massage therapist and I also work a second job on weekends. While it’s impossible to show my entire income due to the nature of my job, I would say that I make approximately $65,000 per year. I pay all of my bills on time, make much more than minimum payments, no longer use my credit cards so that I can get rid of my debt and raise my credit rating, and I’m saving cash in several different places from a cash box under the bed to TRowe Price online. Every week, I save as much as I can and I am no longer living paycheck to paycheck.
My credit does, however, show the IRS debt that my husband racked up without my knowledge, back when he was unemployed and then employed as a consultant. Unfortunately, his three children were abandoned by their mother, and due to their special needs, my husband was unable to put money aside to pay his taxes while they were living with us for two years.
After I became ill from the stress of the situation, the children went back to living with their mother and I got better in about six months. But I was not aware of the debt my husband racked up, even when tax time came around and he asked me to sign our joint tax returns. I don’t think my husband kept it from me on purpose. I believe he was simply overwhelmed at the time and wasn’t thinking clearly how all of this would impact my life, our marriage and our credit.
Also without my knowledge, my husband allowed the IRS as well as the state of New Jersey to put liens on our home. The state even went as far as to levy my bank account and even put a stop on my vehicle, which blocked me from even registering my car. This problem has all but taken the life out of our marriage and I now realize that marrying him truly was a mistake.
Sadly, I must keep going on and trying to repair at least my own life. My husband continues to make minimum payments, runs his credit cards right back up to maximum, and even misses payments. Most recently, we received an insurance check to repair our roof that’s been leaking for many years, and I’ve just been made aware that he spent it; all of it. I am beyond upset over this.
Furthermore, the other half of our home, which we moved out of three years ago to allow for a tenant to help our financial situation, has still not been completed. While I don’t understand what my husband is doing or even thinking at this point, I’ve got to get this home repaired, the rental completed, or to sell the whole house and get out of here!
All of that said, I am now looking to get a bit of the equity out of the house in order to make the desperately needed repairs and to get to the point where we can sell, take in the tenant for extra income in order to save for retirement and to increase the value of the house overall. The problem is that my husband makes the money ($160,000 a year), but has bad credit. I can’t show my income and I have the good credit.
We have my secret savings and the IRS debt on the mortgage. My name is not on the mortgage. I am listed as a debtor through marriage, so even if I were to up and leave this man, the debt would follow. If my husband were to refile for bankruptcy, the IRS lien on the house would open up the equity and release the lien on the house, but they would still come after me, and all of the hard work I’ve done for my credit will be abolished.
What can we do? My thoughts are that he files for bankruptcy, we then pay the IRS on a plan together for a time, use my credit to get ahead and then work out some sort of amnesty with the IRS. Between the mortgage, the child support he pays and the extra state and IRS expenses, we are in a stalemate position. Please help with any suggestion possible!
Please feel free to post this story if you think it might help others.
Distraught Wife
Dear Distraught,
If you were a chess piece, you would be the pawn.
I’m not sure what piece your husband represents. I do know, however, that he only makes his move when you are not looking. You helped him, you suffered, and now you face the same financial maelstrom again. Your next move should be a knight in the form of a lawyer, who can advise you (not your husband) on how to extricate you from his finances and figure out what you are responsible for.
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I have two pieces of advice for you: 1. He lied to you by omission. People don’t change. Your husband has proven that. All the signs point to a future where you spend a lifetime digging him out of holes. 2. Your trust has been broken. Separate your emotions from your finances. He asked you sign documents without giving you the facts, involving you in his misdeeds.
Being overwhelmed is no excuse for premeditated financial infidelity. He has lured you unwittingly into his mess and now you are desperate to find a way out because you feel you are trapped. A tax attorney can help advise you on your options regarding your home, a divorce and/or legal separation, and spousal forgiveness from the Internal Revenue Service.
You must meet all of these criteria to qualify, according to the IRS. Read them here. Among them: “You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax. Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.”
Your husband’s salary may provide you with a feeling of financial security and give him leverage to overspend, but it’s no way to live. You can live within your means in a smaller home, according to your own rules of fiscal responsibility. You’re better off paying tax on your tips than using them to pay your husband’s debt. That only draws you further into this moral maze.
Take heart from this comment on the Moneyist Facebook Group: “I had a similar situation with my ex-husband but it involved his gambling debt. Divorce and a good attorney was my solution. Today, nine years later, I have a good job, savings, retirement savings, and I have found a good man/husband who believes in the financial peace we both work toward.”
Be the king or queen in your next relationship. Or both.
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