Divorce, $19,071, remote rehab

This is a complex one, and I need immediate input, so I thought I’d post it here.

This is a semi-cry story, and its long; brace yourself.
In May of this year, my now ex-wife decided she would get a divorce. Mostly to take the money, the kids and the house. Due to that, I was out of the real-estate business for most of this year. In April of this year, I bought two REO properties in Toledo, Ohio - I live in Utah. I paid $7,000 for each. The person that sold me the properties claimed that he was going to property manage. I paid him $1,500 per property to do that. As I said, the divorce consumed pretty much all my time from May until November 4th when it was finally completed.
On November 5th, the city of Toledo sent me a Nuisance notice concerning one of the properties I bought. It basically said that I have to either fix the property or demolish it, or the city would demolish it for me and send me the bulldozer bill. Demolition bills typically cost between $10,000 and $15,000. The proceedings from my divorce require me to pay $1,160 per month in child support. On top of that, I have to cut my ex-wife a check for $19,071 by December 1st.
Upon getting the notice from Toledo to fix the properties, I wanted to skip the whole damn country and fly to Spain. Haha! I speak fluent spanish. A few minutes after I had that thought, I just told myself to buckle down and get the job done! So, I started calling the Toledo Real-Estate Investing Association. Within a few days, I had a solid general contractor lined up to fix one of the properties. He gave me an estimate of $6,000 to $10,000 to rehab one of the properties like it needs to be.
Once I got the city nuisance notice, I started to call around to find out what happened to the “property manager” that initially sold me the houses. Turns out that he was just a middle-man who bought the properties from another company and re-sold them to me. That’s fine; nothing wrong with that. I contacted the original company and came to find out that the “property manager” embezzeled $20,000 from that company and skipped town to somewhere in New York. Fortunately, I did purchase the properties and have title to them.
So, I began to call the utilities to get that next part taken care of. I came to find out that I had actually bought two duplexes instead of just SFH. Bonus. On one of the properties, I came to find out that there is an outstanding $3,025 water bill. Seems somewhere between January and April, the water had been left on and flooded the place before the city finally decided to shut it off. Not a bonus.
Despite all that, I listed the water damage property on craigslist and actually found a buyer for the property that was very interested in doing the fix-up work herself. I negotiated and she agreed to pay me $13,000 for that one on a rent-to-own at $280 per month until paid for. I am presently in the process of having her sign a lease agreement and put the property under a land contract for the sale.
The other property that is having the ~$6,000 rehab done on it, the contractor owns a dozen or more properties in Toledo that he rahabs and property manages. He says that he can do the same for this one and rent out both parts of the duplex, probably for $280 a month each side.
Oh, and the ex-wife and I had a “rental” property foreclose on us in July 14, 2009, and we are currently not making payments on the marital home (per the divorce stipulation) and she’s living in it while I am stuck in a 1BDR $575/month apartment. Don’t really know if that has any significance on any of this, but, like I said, this is a semi-cry story. Haha! :help
Oh, Oh! Chase Manhattan has our mortgage on the marital home. Due to us not paying on the property, they put a hold on all my accounts with Chase until I pay them off. So, on top of having a foreclosure on my credit, plus over 12 months of late payments on both 1st and 2nd’s, I don’t even have credit cards to fund any of this, much less loan possibilities of any type.

Ok, I think that’s it. So, presently, I have the ball rolling on both properties. I have the city lined up to get utilities on. I have rehab being done on one property, with parts on order. The guy doing the rehab is well known in the local REI Association and will double as property manager. It should be ready to be rented by mid- to late- December. I have a rent-to-own tenant buyer in the other willing to do all the rehab, since she will eventually own the house anyways. I have $19,071 check to pay to my ex-wife by December 1st, and I think I’m gonna tell her to stuff it and use the money to make these two properties function. I’ll still pay the child support.
I met with a bankruptcy attorney today and he said that my ex-wife truly screwed me over in that if I filed now, I would end up paying around $122,000 when it was all said and done. If her and I would have filed jointly, we would have paid the bankruptcy attorney $2,000 and been done with it all.

So, what is everyone’s ideas, suggestions, advice, criticism, tips, tricks, sorrow, pity, pain, remorse, wish me the best of luck? In the end, I’ve been around enough, read enough on these boards and elsewhere, been to enough guru seminars, can find the contacts and people to make the project happen, am intelligent enough and tenacious enough to get this done; I just gotta do it without having a catastrophic panic breakdown. Hahaha! :bouncemulti Still, I wanted to get as much brainstorming involved that I could as this is the first remote rehab/landlord I’ve ever worked. Thanks.


Wow, Dean. Your plate this Thanksgiving runneth over! I don’t have advice on the remote rehab, except can you get back there for a couple of days and take a look at those houses?

But you have so much going on that you need someone to talk to. The brain sometimes works better at planning if you can verbalize your thoughts. I hope we can help you here.

If it were me, I would get a big block of paper and make a list of problems. Then I would make a list of positives–(!. Good health 2. You are a smart well-spoken guy 3…).

Then I would try to figure out WORST POSSIBLE CASE on each problem. Now how would you handle each worst possible case? Personal bankruptcy, debt-payback planning, getting higher-paying job, getting second job?

The most devastating loss of course is losing your marriage. But you still have your kids, and will always have them. They are number one. You will heal from the loss of your relationship in time.

Your life is so complicated and full of stress that you need to focus FIRST on your health, and secondly on your kids. The rest of it is just stuff and money. You will get through this terrible time. Sometimes you come through a fire better and cleaner. All the junk has burned off.

Good luck, Dean. Please keep us informed.


Dean, I sure hope this comes together for you.

The only comment I can think of is not directed at Dean, it’s directed at the other investors starting out, and it is this:

If you are going to get married, choose your spouse carefully, and for solid values, not superficials like her looks or the nice car he drives. Once you are married, put some effort into making sure your spouse is getting enough out of the marriage that they are content.

No happy woman ever divorces just to get the money and the kids. She already has the money and the kids and the house and the cars and the bank accounts while she is married.

Marriage takes work and effort. The marriage and kids should be the first priority. Number 1, always. If your spouse (man or woman) is unhappy, a divorce can really mess up your investments and retirement plans. If the kids are neglected, they get into trouble and perhaps decide they dislike the parent, and that’s hard to live with.

Of all the investment that you will ever make, your marriage should be the most important and the one you put the most effort into.

Word of advice… Make sure you have NO MONEY in Chase Bank accounts or they can do an OFF-SET and take the cash without telling you…

Dr. White,

First off… sympathies on the marriage and the kids…

Second, just because an attorney says you should file for bankruptcy doesn’t mean you should. From what you listed, you may not even need to file bankruptcy, which has a much more devastating effect on you long-term than late-pays during a rough period…

A few things are needed to asses your total situation…

What is your total consumer debt and monthly payment totals?
What is your monthly/yearly income aside from real estate?
Mortgage balance for rental property you aren’t making payments on and your primary residence?
Did you pay cash for the other two $7000 properties?

Feel free to provide as much info as you want (or PM me if you don’t want to post it publicly), as I have seen worse situations that didn’t end up in bankruptcy when all was said and done.

Unless I read it wrong, you have a total of $122,000 in outstanding liabilities. If your income is above $60K per year, this is manageable…

Just some other thoughts…

  1. City nuisance - they just want to see movement… As long as you document that you are moving forward, they will work with you. Tell them you anticipate a six-month timeframe

  2. I wouldn’t try to tell your wife to stuff the $19K… although it may feel good, it will just add stress… you were married, and you had kids together… if you approach her with the details, she will most likely work with you, as at the very least, you are the father of her kids… Don’t give her lawyer and your lawyer more money trying to hash something out to avoid additional stress on both of you, but more importantly the kids… you are both adults, and if you approach it from what is best for everyone involved, including the kids, with an end-game, she may be more receptive…

  3. Remember, YOU are in control, NOT the creditors. Settlements may be possible. Remember, the kids come first when it comes to payments…

  4. When you are deluged by negative experiences, it is hard to remain objective… especially when it involves personal loss… Look at your situation from a business perspective… it will help focus on what needs to be done.

Bankruptcy is a LAST RESORT… Unless you are unemployed with no income, your situation is most likely manageable…

Based on personal experience and watching another guy at work go thru almost exactly what I went thru, I strongly disagree with Positive’s point #2.
My NON-court ordered “child support” (what my lawyer told me to pay so I would position myself well to get custody) went for the following:

  1. pay for babysitters so she could go out and whore around
  2. later to support her live in loser who decided I was sending so much money to the household that he could just quit his job
  3. buy about $500 of “adult novelties” for her
    and I’m sure there were countless other things money was wasted on besides my children’s well being.
    There’s also a guy at work who makes about $140K/yr who is living in a small apartment and can barely afford to feed himself because he’s sending so much money to his ex who claims she needs all that to support the kids. She’s taking everything she can so he doesn’t have anything. Then she tries to guilt him into sending more money for other things (the kids want to try this dance class, etc) too.
    My point is the issue about “she’s the mother of your kids” doesn’t hold a bit of water with me. Some women are just plain evil, lazy, and have nothing better to do than try to ruin you. Are you ordered to pay her that amount or is this some type of blackmail thing where you’re trying to appease her so she doesn’t take more legal action against you? If she got the divorce to get control of your money (as you alluded to), chances are NOTHING you do will be good enough. Trust me. I worked hard for what I had. I was screwed out of tons of money (at least it was tons to me) and walked away with a car and two days of clothes. She ended up much worse, but it took a hell of a fight. I dug myself out of over 105k in non-mortgage debt. I’m also incredibly happy now that I’m remarried. I now see what a real marriage is supposed to be like. Defend yourself and your positions. Don’t let her take advantage of you. My friend at work is having the life sucked out of him because he’s letting it happen.


With regards to point #2, the impression I got from the post, was that the $19K was part of the settlement, and the $1160 per month was child support. I assume these are set numbers because they are specific numbers and the timeframes were specific. I don’t think he has an option when it comes to child-support as it was just litigated… the lawyers can cause all sorts of trouble for non-payment of it…

What I was suggesting is that if Dr. White didn’t have the $19K, that trying to tell her to “stuff it” isn’t probably the best course, as he wants to use the money to get the properties up and running. All this will do is make the situation worse, the lawyers richer, and not really solve any problem… I don’t know his wife, but like the old saying goes, you attract more flies with honey not vinegar…

If it were me, I would offer her a 10% interest rate (more money than she would get elsewhere) and then make the case to the wife that ultimately the kids benefit, as it will help keep him solvent, or maybe half now and half in six months with interest. She may not want to, who know’s, but it never hurts to ask… worse case, he just gives her the money he planned to anyway…

Your point about making it through $105K in debt kinda goes along with what I was saying that bankruptcy may not be necessary, but more info is needed…

Sometimes the real issue with these things is how is she paying for her lawyer. Enforcing CS payments is not as strong as it should be. If I pulled the crap my ex does, I would’ve been in jail by now.
If the 19k was court ordered, it probably wouldn’t be good to just blow that off but she would also have to go back in and fight some more if she wanted it enforced.
It sounds like she’s only interested in fleecing money out of him so I’m wondering what that 19k is for and who ordered him to pay it.
I wouldn’t offer interest on anything not paid now. I’ve not heard of people collecting CS plus interest or anything like that. No reason for him to dig his financial hole deeper.
It will be interesting to hear other details and get some feedback on all this.

Sorry for the AFK there. I have been working bloody hard to get this properties stable and get the $19K paid off.
Yes, the $1160 is monthly child support and I can pay that.
The $19K is division of marital funds. Yes, it is court ordered. Its not that I’m not going to pay it. I’m just not going to pay it on time. It was due on December 1st, but my attorney sent over a 90 day extension to the ex’s attorney which will put it out till March 1, 2010. I figure that I’ll have everything stablizing by January and will have the $19K ready by March. If nothing else, my 2010 tax return can make up what is missing. Unfortunately, this will mean that I lose the entire tax return this year - again! :cussing Last year’s went to paying for attorneys.
The properties. Yes, they are paid for in cash. Currently, I have a tenant buyer for one of them and a local rehabber for the other one. Then, I’ll hire him as the local property manager. If things go well, I honestly want to buy more of these properties before the prices start to go up.
In the end, I didn’t tell her to stuff it, but I sure wanted to. I told her that the money isn’t there, it probably won’t be there until mid-January or so, and there is no magic wand to make it suddenly appear. Hey, I still had to get one cheap shot in!! :beer I was real close, though. At one point in my account, I saw the entire amount needed to pay. Unfortunately, the next day I cut a check to the rehabber for $4000+. So far, he has gotten the house sealed, and new window are supposed to arrive today.
The other property has been a mess. Not big thing. But lots of little things that keep adding up to big. The tenants seemed pleased, though, as it is much better than their other place. They are happy that they are getting to fix/build the house the way they want. Anyways, so far so good. Let’s hope the good vibes keep a watch out for me. Like I said, these properties are in Toledo, Ohio. If there’s anybody that knows of good referrals for that area, let me know. Always good to have backup plans ready to go just in case.


I’ve been in contact with several debt consolidation companies about trying to get rid of all this debt that has come about. The general plan they propose is that I stop paying on all my creditos. Make payments to the credit negotiation companies into an escrow. When the escrow account is big enough. Start negotiating with my creditors to get a payoff that is pretty close to the escrow balance.
The upside is that the settlement amount will most likely be less than how much it is now.
The downside is that I stop pay on my creditors and take the credit score hits.
I sit here and think, Hell, I can do this myself! I don’t need to pay the damn credit settlement companies to do it for me!

But, I wonder if I can just pay all this debt off over time. With that, though, I end up pay “full price”. If I can negotiate the credit down lower, I pay at a “discount”. In any case, it doesn’t look like I’ll be doing much personal real-estate investing for quite some time to come.

What are everyone’s tips, tricks, thoughts, plans, strategies for all this? Thanks.

I got saddled w/ a ton of debt from my divorce. Most of it was lawyer’s fees, but a good chunk was just debt from the marriage and since my name was primary on the accts I ended up w/ it. I moved into an apartment and got a roommate to help w/ living expenses. I tried to cut way back on entertainment and other expenses. I sold cars I got from the divorce. I started tackling the CC w/ the highest interest rate and just worked my way thru everything. Tax returns and any extra money went to bills. My credit score rose about 100 pts by the time I got all the CC debt paid off. I would personally rather pay down the debt as I could rather than credit counseling and taking that hit. If you concentrate on eliminating one bill at a time, you’ll see that balance go down significantly. If you spread your payments around too much, it will seem like you’re not really making much progress.
I liked tracking my history of total debt on a spreadsheet so I could keep myself honest and also look back at my progress. It’s nice after a year to see that you paid down $40k in debt.

Logic always tells us to bigger then highest interest rates down first however PEACE OF MIND tells us to eliminate the smaller balances first so the bill is just gone which makes us rest better at night knowing one less check is written but still able to pay the same amount each month.

Now I do not know the situation in full so here are a few things and maybe one will help.

If your credit is still good (meaning credit cards are up to date) and you have avail credit, look into balance transfering all the debt to one card or 2 if possible. you will see the bills paid down faster because of min. payments due if you have less cards really (peace of mind). Check with your card and see if it is avail or even apply for new cards if credit good and do balance transfers where you get a low interest rate promotion.

Another option is to call each creditor and work on a settlement. Many want to do a settlement where you pay it off in 1-3 payments but in this day they should talk more. Get the right person before explaining your problem and see what can be done. Ask if they can cancel the card (stop it) and stop charging interest so each payment is a principal payment. Explain your divorce and just looking to get out of debt ASAP. Go the hardship way, possible have a hardship letter ready like on a shortsale. Also while asking to work on deal, offer a 12 month pay back plan with a set payment if doable. See about reduced balance as well on this.

Debt consolidators just show creditors your in a program and all these banks have a set dollar figure they settle on, typically 25-50cents on dollar depending on bank. Explain that will be your last option but like to keep the middleman out and deal directly with them.

Just like REI, you have to make offers and see if accepted. Its like buying a house, start low and go up slowly. Worse case, you can tell them if they can not work out a payment plan reasonable for both sides you will look into bankruptcy.