Not Happily Ever After: Divorce, Mortgages and Personal Finance

By Calum Ross

I am a marriage alumnus. While my divorce is not something of which I’m proud, because of it I was forced to change my life and ultimately became a better person. I was fortunate in that I had always been blessed with things, for the most part, going well in my life. Divorce, however, seemed to scream in my face you failed at this thing called marriage. Post divorce, I was on my own for the first time in 12 years. I know that there are many people going through and have been through a divorce before I did. I remember hearing the first step when getting divorced is to find a solicitor you can trust, and even though I took the steps to do that, it still felt as if I failed.

Eating alone in my condo many many nights in a row, was more than depressing. I found myself dining out every night, just to avoid eating and being alone, something others have said also struck them when they went through a divorce. I had set scheduled time to spend with my two girls, who at the time were two and five. I think my eldest, Abigail, was as nervous as I was the first time she and her sister spent the night at my condo downtown.

All the years I had spent working meant I was a great financial provider, but some of my parenting skills left a bit to be desired. I felt like a new parent all over again. While the transition wasn’t easy in the beginning, I cherish my weekly “daddy/daughter time” I have with my girls.

Plus, the circumstances behind my divorce could have been a lot worse. My ex-wife and I simply fell out of love. However, a friend of mine from British Columbia recently got divorced after finding out that her husband had been having an affair. She had suspected that her husband had been cheating on her for quite a while and decided to hire the best Private Investigator BC had to offer to confirm her suspicions. It turned out her husband had been having multiple affairs throughout their marriage. However, it was only through the private investigation process that she was able to get proof. As unfortunate as the breakdown of her marriage was, my friend seems in a much happier place now.

Everyone who is a marriage alumnus (a term I believe to be a Calum Ross original it means that I am not bitter about this fact, but rather I have graduated from the institution of marriage wiser and stronger from the process) has his or her own divorce stories. Invariably child/spousal support and custody make up a lot of the stories. And dating post divorce. I’ll let someone else tackle that one (although interesting tales could be told on this with certainty).

Ironically, what took me most off guard, especially given my educational background, was how complicated divorce can be when it comes to personal finances and the world of mortgages during a divorce. Thank goodness the week before I had been reading up on a personal finance site in preparation for this! Even after two finance degrees and extensive financial planning formal training, I underestimated the complexity of it all. I had holding companies, operating companies, registered and non-registered assets, investment property and a soon to be ex-wife and two young girls who needed to be provided for.

I have seen clients taken by surprise when applying for a mortgage while going through a divorce or even as a newly divorced homeowner. Mortgages during divorce are a whole different ball game. Below are a few things I have learned through my own and others experience that I felt were worth passing on to anyone going through.

Have copies of your records and any bank, credit or mortgage application

It’s a lot easier to make copies prior to divorce than chase down trying to get records during a divorce (especially if relations are not optimal and home access becomes limited.) These records include three years of tax returns, financial statements from your investment firms, accountant, lawyer, banks (both assets and liabilities), any life insurance information. If you are an executive and/or business owner your stock purchase rights and any sellable business interests become relevant. Credit and mortgage applications typically list income and all assets joint or otherwise. This is a very good source of information, especially if the verity of statement starts being questioned. Make sure it is timely and accurate, and get it right from the source. You may also want to examine your rights in regard to Social Security and divorce. Since your social security included your spouse, it will have changed to accommodate your new status.

Cancel joint lines of credit, joint credit cards

While no one anticipates nastiness during this process, emotions run high, and I have seen very sane people do not so sane things (especially where infidelity is concerned.) I’ve known clients who did not cancel joint credit cards quickly enough and had to contend with intentionally large credit card bills (one in 2012 that was able to max out over $70,000 in available credit in just under one month’s time for the record the spending spouse was held responsible so don’t get any ideas).

If one spouse is responsible for paying down a joint line of credit, ensure payments keep getting made. Any missed payments will impact both spouses on something like this and creditors don’t differentiate between the paying and the spending spouse.

Be conscious of your spending

This is particularly true if you will be dependent on your spouse for either spousal or child support. While human nature is to carry on with the same lifestyle and to maintain a sense of normalcy, until payment amounts are resolved and final, it’s just a good idea to be more aware of on what and how you are spending so you don’t find yourself in a position where you have spent beyond your new means.

‘Divorce is one of the most financially traumatic things you can go through. Money spent on getting mad or getting even is money wasted.’ ~ Richard Wagner

Perhaps the most important piece of advice I can offer during this process is to take the moral high road. It is all too easy to be tempted to strike back when someone plays dirty (I won’t claim that I was an angel), but remember that no lender will provide you with a mortgage until the certainty of your current and future financial commitments is determined. Going to court and arguing will only prove to be an effective way to transfer your wealth from your hands and the hands of your soon to be ex to the trust account of a family lawyer who will be more than happy to counsel you at hundreds of dollars per hour.

You will be surprised at how uncommon common sense can be during this process so reach out to people who divorced gracefully and avoid the ones who thought fake police calls and bogus restraining orders made good sense. I had a client’s ex-wife file a police report because the children had taken an iPad to his house (she had insisted he was in possession of stolen property.)

Regardless of what the person did to you, I would encourage you to remember them for the person you once chose to marry, learn from the experience and move on. I read a quote recently that stuck with me: No relationship is ever a waste of time. If it didn’t bring you what you want, it taught you what you DON’T want. (source unknown)

I have become quite passionate about helping people in this situation and for a guy who once defined his success by his wealth I can assure you that giving up more than half my net worth through my divorce settlement was one of the best investments I ever made only because I was in an unhappy marriage, and happiness, to which most people going through a divorce can attest, is priceless.

Today, I am a better father and a more content person than I have been in most of my adult life. It turns out that people do grow apart and some things are not meant to be but that doesn’t mean I won’t be living my happily ever after.

Calum Ross was ranked as the top producing mortgage broker in the country by Canadian Mortgage Professional Magazine. He holds both a B.Comm and MBA in Finance and recently completed a comprehensive Leadership Program at Harvard Business School. Reach him at: www.calumross.com.