AIBU to think this is fraudulent redistribution of funds? Divorce finances...

[Bedraggledmumoftwo]

Will try and keep it short- two of my friends (A&B) are getting divorced. They currently split their shared costs in relation to their relative net incomes A:B- for simplicity call it 60:40 rounded in B's favour. They are now separated. They asked me to mediate a conversation about short term arrangements today, most of which was fine.

A few years ago B's mum sold them her car in an informal arrangement, which they were paying off in instalments, but recently with the cost of living she wrote off the debt and said they didn't need to pay the repayments any more.

They are now having to pay for a second set of accommodation costs, which they are also splitting according to the net income ratio so money is tight for both of them.

B has said that B's mum wants car repayments to restart now. I was slightly incredulous that she would want to increase financial pressure on them both at this time when already incurring additional living costs and said why would she do that to you both now unless she is planning on giving the repayments back to you? I hit the nail on the head and B wasn't quick enough or switched on enough to lie - lots of bluster about how "she was happy to not have the repayments until her child was getting divorced. She only wants A's 60%. And if she then wants to give me that money then that is irrelevant, its a gift to me from my mum".

To me (and I'm an accountant so "substance over form") this is B's mum fraudulently diverting funds from A to B. Robbing Peter to pay Paul. Taking money from A and giving it to B largely to punish A for asking for the divorce. Funds which A doesn't actually have due to paying for 60% of the additional accommodation costs. This will mean B has quite a lot of money after their family costs and A is left with next to nothing. In the meantime the car remains an asset of the marriage and due to theoretically being the lower earner B will most likely end up with a higher split of the net assets in the end!

I think it is not "a gift" from B's mum, it is regular net income deliberately redirected from A to B by reinstating a previously written off debt out of spite and therefore it shouldn't happen (reinstated debt can be paid out of capital from eventual house sale if necessary) but if it does happen that A makes repayments that end up in Bs pocket then the net income calculation needs to be redone as this is just wrong and tantamount to fraud!

AIBU?

The creditor (mum) wrote off the debt and said no more payments were required. Can they legally change their mind? Would mum lie in court about doing so? Is there anything in writing? In A’s position I would not pay and would be happy to discuss in court.

Agree!

legally from what you've said if there's proof the mum had written the debt off she can't go back on that - it's called promissory estoppel. She stated she won't be enforcing the debt and that's enough to waive her right to repayment.

I don't think there is anything in writing about the debt at all, not creating it or writing it off but I'm sure I remember them both saying it had been written off at the time. It is just now that the mum is very angry about the divorce that it is being reincarnated in this lopsided way. And yes she might be angry enough to lie in court about it sadly.

Why are you mediating this? They need a 3rd party who is neutral to both sides.

If the mum is going to be giving her dd cash then it sounds like the 60/40 split needs to be renegotiated to take into account that B has more income. If I were A I would not be paying 60% any more. I'd also move back into the marital property so that B couldn't shaft me by not paying her share of A's property.

It's a shame that there's no proof that the debt has been written off

Do they both use the car if they are not together ?

Who has the car?

I think they've chosen her because they trust her judgement to be fair. What she's said about this loan sounds fair and reasonable. If they can't agree the neutral third party will need to he 'the courts'

@JudgeRudy

I would never agree to mediate between two friends divorcing. It’s a legal matter and should be dealt with as such.

Who’s using the car?

I'm not properly mediating just providing an audience to make sure they both have a say which otherwise wouldn't happen.

They have two cars of the same size. Annoyingly the preexisting car was registered in bs name so despite the fact this one was taken on for B it is registered in As name

I also am neutral to both sides. I'm friends with both hence making them both gender neutral and have put B up in my house during the down periods (they are doing the birds nest thing) since they were separated. I just think it's wrong what Bs mum is suggesting (although she was probably hoping noone would call her on the substance of the transaction). Fraud is probably not the right word. Maybe extortion is better. Irrespective it's wrong and although I was previously neutral to both sides it's now leaving a bad taste in my mouth and may destroy my friendship with B.

Was a formal contract drawn up and signed for the sale of the car or was it just a verbal one? If its the latter then the mother should be told to sling her hook

I think your stance that if the debt is still owed then it should be paid out of any eventual settlement in the proportions set out then is a fair one. I’d just make the case that as the debt wasn’t currently ‘live’ and it’s a terrible time to add to outgoings for either party, that a family member can surely wait.

If it’s truly the moral principle that B’s mum wants to have not gifted A anything, that will be settled and A’s share of the debt paid off eventually. If it’s actually a backhanded way of making A pay more monthly to B, then that should rightly be called out.