New Jersey Bankruptcy Podcast

Debt, Divorce, and Practical Wisdom: A Conversation with Jeffrey Horn

• Daniel Straffi Jr. • Season 1 • Episode 1

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In this episode of the New Jersey Bankruptcy Podcast, attorney Jeffrey Horn of Horn Law Group joins host Daniel Straffi Jr. to provide valuable insights into managing the financial complexities that arise during divorce and bankruptcy proceedings. Jeffrey discusses practical strategies for addressing overwhelming debt, hidden financial issues, and emotional challenges, empowering individuals to make informed decisions and achieve financial stability.

Podcast Takeaways:

  1. Clearly communicate all debts to avoid financial and legal setbacks.
  2. Utilize joint bankruptcy consultations for more efficient divorce settlements.
  3. Break down financial fears into actionable, manageable steps.
  4. Leverage bankruptcy strategically in divorce negotiations.
  5. Prioritize net financial outcomes rather than emotional victories in court.
  6. Inform clients about bankruptcy’s limitations clearly and early.
  7. Use Chapter 13 bankruptcy as a tool to simplify complex debt issues.
  8. Engage bankruptcy specialists promptly to clarify debt-related issues.
  9. Discourage clients from costly litigation over minor financial grievances.
  10. Maintain a long-term financial perspective throughout the divorce process.

Jeffrey Horn
Jeffrey Horn is a seasoned family law attorney with over 30 years of experience and the founder of Horn Law Group in Toms River, New Jersey. Known for his pragmatic approach and effective strategies, Jeffrey authored "Shock Proof Divorce," guiding clients through the emotional and financial complexities of divorce.

Daniel Straffi Jr.
Daniel Straffi Jr., the host of the New Jersey Bankruptcy Podcast, is an experienced bankruptcy attorney at Straffi & Straffi. With a passion for providing accessible financial solutions, Daniel combines compassionate advocacy with insightful financial advice to empower individuals facing financial distress.

New Jersey Bankruptcy Podcast
The New Jersey Bankruptcy Podcast, powered by Straffi & Straffi, delivers valuable financial and legal guidance tailored specifically to New Jersey residents. Each episode provides insights, strategies, and advice to help listeners regain financial stability and successfully navigate bankruptcy-related challenges.

Youtube: https://youtu.be/wju7tBs6BrE

Daniel Straffi Jr.:

Good afternoon everybody. Welcome to the New Jersey Bankruptcy Podcast. We are powered by the law firm of Straffi Straffi. And I'm your host, Daniel Straffi Jr. Today, we are welcoming our guest, Mr. Jeffrey Horn. Jeff is a member, owner of Horn Law Group, located in Tom River, New Jersey, a longtime friend and a practitioner of family law for well over 30 years. Jeff, welcome. How are you today?

Jeff Horn:

I'm great Dan. Thanks so much for having me. it's my pleasure to come on with you. No reason for me to be nervous. We spoken many times, but I guess its excitement, nervous.

Daniel Straffi Jr.:

That's what it is especially from the technological standpoint of actually making all this work. But when I thought of my first guest, I could think of no one other than you with your previous history podcasting. What's the status of that, Jeff? Are we still doing it or what?

Jeff Horn:

I did The Bold Sidebar for a few years with a couple different formats, and then I just got overwhelmed with a bunch of other fun stuff. Practicing law and then I've run for office a couple of times and helped a lot of other candidates. All of a sudden I just didn't have time. But you definitely motivated me to get back to it I gotta say. I'm excited to help you out. You helped me out. I'm looking forward to doing this and this is like a conversation we've had many times.

Daniel Straffi Jr.:

Exactly for the benefit of the greater public. We're gonna talk about bankruptcy in a certain respect as far as how it interrelates with divorce and we see it happen all the time. I guess that gets to my first question for you, Jeff. What happens if one spouse finds out that the other spouse has secretly racked up some form of debt? Have you experienced that? I'm sure you have many times, but what is the first reaction that you have when you encounter something along those lines?

Jeff Horn:

The first reaction is always, I feel bad for that person, and I assume they're being sincere with me. It really is a blow if people think they've got a pile of assets that is not offset by a bunch of debts, and they find whether it's credit card debts or I've had people, even with mortgages, they either forgot that they racked up another mortgage or they forgot about some of the debts. It can be very devastating. I've studied the statutes in the case law and I've tried to find the thing in those that says, if you don't know about it, you're not gonna be on the hook for it. But that's not where we start in New Jersey equitable distribution law.

Daniel Straffi Jr.:

100%. You've been very generous in your bankruptcy referrals to me, but have you found the interplay with bankruptcy to be helpful as far as advising clients in that regard?

Jeff Horn:

Yeah, I mean, you are the one who taught me about this following statement. It's been in my head for years. Every bankruptcy client that walks in has a sincere desire to pay their bills. Maybe there's the rare outlier that's kind of a crooked guy or gal. And same in their divorce. They wanna get rid of their debts, divide their assets, be fair to their children. That's what everybody wants to do. I always thought bankruptcy was a super scary thing. If you are bankrupt it's like not only are you bankrupt'cause you don't have money to pay your bills, you're morally bankrupt, you're bad. I think bankruptcy has saved a lot of people's divorces from being horrendous when it just became manageable. Now it's hard for them to bite off a divorce in a bankruptcy all at the same time. I found in a number of cases, especially when we came out of the great financial crisis, 2008, and for a number of years thereafter. Bankruptcy actually help people get that fresh start, which divorce can do it too, if you have the right mindset and you can't get divorce and a fresh start and have enormous amount of creditors chasing after you.

Daniel Straffi Jr.:

Yeah, so much of it is dispelling that stigma. You know, there used to be the stigma associated with divorce. Unfortunately, it's so prevalent today. The majority of marriages end in divorce. But, when it comes to the bankruptcy stigma, it runs the gamut as far as all classes, income levels, ages, you name it. And the majority of people do wanna try to pay their debts at the end of the day, but it's very difficult to get by in New Jersey these days. And if someone's secretly racking up debt, I mean, forget about it.

Jeff Horn:

Yeah, it's really tough. And maybe going back earlier in my career, I used to think, oh, these bad people secretly racking up a debt and their spouse doesn't know about it. And then I go, they probably were trying to not alarm their spouse. Well, I'll have this debt move over here and I'll move it over there and things will get better and I'll wipe it all out and then we'll be back to equilibrium and then it doesn't work out. And then the marriage has hard times and financial hard times. So it's like a combination.

Daniel Straffi Jr.:

That's a great point because the question I posed kind of assumed that someone was doing something nefarious. That is not necessarily the case in many of these scenarios. Oftentimes, it's someone trying to protect the other spouse. They should have communicated, but it doesn't always happen as we know. When you're trying your best, you're robbing Peter to pay Paul, you're getting balance transfers, you're doing whatever it takes in order to get by, it can get away from you rather fast.

Jeff Horn:

No one sees it going, how it ends up, right? They go, okay, I'll kind of hide this bad decision I made or this mistake I made. And then you compound it. Look, there's gambling, there's all kinds of reasons that it might get started. It's like in politics it's always the coverup not the underlying crime that's so bad.

Daniel Straffi Jr.:

Indeed. Now, Jeff, you say that fear can often paralyze people during a divorce. How do you help clients move from that panic to ultimately planning?

Jeff Horn:

That's really important for people and it's the old adage, how do you eat an elephant one bite at a time, one slice at a time. Their fear is one giant ball, and they don't know how to slice it up or break it down. So that's the first thing we do just get things into smaller chunks. If you chunk it down, things become a little more manageable. And for people that are really gripped, I learned this technique years ago, I believe Tim Ferriss, another big podcaster, spread it effectively called fear setting. And you just go, okay, what's the scariest thing that can happen with your credit card debt? Oh, I can't pay it and I can't use my credit cards. Okay. Is that the worst thing in the world? Well, it's pretty bad. Make it worse. And you let people break it down to the most scary possible thing that can happen. Then they go, eh, that's probably not going to happen. And It kind of takes away the grip of the fear. The issue is still there. But it's kind of the grip and how you handle your plan going forward. As you say, you go from scary in the grip of the fear to a plan, to a strategy to, you know, I'm an agent of the future. My job is to get you through today with the hope that you're gonna create, the future you want, post separation, post divorce, and hopefully post this kind of fear.

Daniel Straffi Jr.:

And the whole point of a bankruptcy at the end of the day is to get a fresh start. And in many ways, you are the arbiter in the divorce trying to get your client to that fresh start. They have consistent values in that regard. Consistent goals. Part of what we're taking from today is your book called Shock Proof Divorce. Where'd you come up with that title and how did you come about in crafting that?

Jeff Horn:

This is from the first days of my practice. I was a note taker, so I would just start scratching notes. It took me a few years to go, man, people are really shocked by almost every bit of the process from paperwork we ask them to fill out to what happens on the first day. And I go, okay, how can we help folks out. Well, make'em shock proof, so they have a little shock absorber in between their current thinking as someone who's not gone through this process. I mean, very few people go through the divorce process so many times that it's old hat to them.

Daniel Straffi Jr.:

Not that we don't see repeat customers every now and then.

Jeff Horn:

We do hundreds or thousands over our career. Two or three is one sample size. So that's kind of how I came up with that. And I always joke, had one child in early my practice and then I said, oh, I'm gonna write a lot of books. Second child came and, well, that was about that. You know, life took over. But, I always tell people again, they were shocked by the process, so I thought they got very angry about the process. So one of my kind of little principles I've shared in there is avoid the process anger, defeat the process anger. Don't get mad about having to fill out the form or don't get mad that your spouse didn't fill out the form correct. Let that just be one piece of this entire puzzle. And the other thing is a lawyer, here's from a client, fight it to the death, take it to the Supreme Court. I don't care how much it costs. Okay, great. We get all excited. We wanna do cases and apply our trade in the most competitive environments, whether that be the New Jersey Supreme Court. And really that's not what they needed. They needed to go, well, you wanna get money from your equitable distribution or alimony. So how much do you wanna spend to get how much? So I always look at this like net dollars. What's the net dollars? If we do this motion or file that appeal, what are we gonna spend? What can we get? So that net dollar analysis was always something I thought would be really helpful for people to measure out their litigation spend and dollars as well as time and energy.

Daniel Straffi Jr.:

And that pragmatic approach to it is really I think, the crux of trying to allow folks to get to the end of a divorce without having to necessarily go broke or end up in a bankruptcy. I mean, our trades can be very complementary in that respect, but is that how you try and approach things overall?

Jeff Horn:

I consider it a failure if we're working through a divorce case and the other lawyer's reasonable and the folks have to go bankrupt because of the case. Either party, whether it's my client or the other client. Look, there are circumstances there that's going to happen. We know that's going to happen. It's just what the parties came to us with. But for us as lawyers, we ought not to exacerbate someone's financial hardship with the case itself, if we could avoid it.

Daniel Straffi Jr.:

Right. And I think that emotion can play such an integral part in the decisions that are made during the course of it. We, as attorneys, have to maintain our cool. Keep that objectiveness. Do you have any stories of where anger may have influenced either the client or counsel on the other side to where something goes downhill and what did you do in order to try to rehabilitate it for the benefit of the client?

Jeff Horn:

That story is in here almost everyday. Unfortunately. I can't say I'm immune from getting competitive and wanting to litigate a case to a certain result and do what's right in our assessment. I can't say I've never been the one to go, oh, let's just go and litigate this issue hard and we'll come out the other side and find out, oh boy, that was not worth it. I am wrapping a case where the parties really had a lot. Anger, mistrust, there was double temporary restraining orders, and we had multiple days of court and witnesses. They both could have gotten a final restraining order against one another, and then they woke up and said, whoa, we're separated now. That's permanent. We're going to raise our children and they spent a ton of money. For really no gain. And I didn't realize it, I have to be honest. The other side didn't realize it. We were just doing our job. We were soldiers litigating a case stand and we kind of woke up to it earlier and said, Hey guys, but they weren't ready. One of the funny things about family court is things don't happen in consecutive days. So if I'm talking to you about happened over a lengthy period of time and the gap time was what saved these folks from themselves.

Daniel Straffi Jr.:

So you had trial dates several months down the road from each other basically.

Jeff Horn:

Right. I visited my daughter, who was in a semester abroad, so that put me outta commission for a few weeks and the judge was on fire about it. The other side was on fire about it. During that timeframe, the parties, when they were doing their parenting exchange and so forth, they got the light bulb that said, what are we doing? We've had days of trial. And we're still going to have to be dropping the kids off to one another. We're still going to have to deal with our house and our bills and our incomes and they kind of said, okay, let's move on. And that's just a recent example, these people burned up tens of thousands of dollars that if they just didn't have that emotional impetus, that would still be in their pocket. The worst part about this job sometimes is when, let's just say three of the four folks involved, both lawyers and one of the clients figure out, okay, here's a good landing zone for these guys. Okay? And the other side is just gripped in that anger and they can't accept and then you start to litigate the case and all of a sudden it's going bad for that person and actually the result they're going to get is worse than the negotiated settlement. So we've got a worse settlement for the person and you've now spent a ton more money. I'm not rooting for that for anybody. And that's result of not being circumspect about what the case is about. No matter anger, no matter litigation capability, right? A lot of lawyers are really good at litigate, but that's a capability that should be utilized sparingly and especially in a matrimonial case.

Daniel Straffi Jr.:

Well, it's like preparing for war in order to get where you really need to go. But some people want to push the agenda in that regard. How do you keep that big picture focus for clients because you have to do your job at the end of the day still too.

Jeff Horn:

Yeah. Not too long ago, I had a client who came in guns blazing, paid us a good chunk of money and we started going down the road. I guess if I get in trouble with clients, Dan, it's because I tell'em how it is maybe too often or too bluntly. I'll plead guilty to that.

Daniel Straffi Jr.:

That's part of the gig though. That's a credit to you.

Jeff Horn:

Well, I appreciate it, but it doesn't pay every day. I sent the guy an email that says, here's what I see now and I can't see justifying spending a lot more money on the case. And it didn't go that great. The guy was really mad at me. And we have this fee arbitration process. So he took me to fee arbitration. And I just said, look, I didn't wanna spend what we spent. In fact, I gave the guy a nice discount at the end. The arbitration panel says, sir, he did more work than he billed it for. So, what you paid is what you paid. I felt bad for that guy, but he couldn't see, even in black and white, what the people on the panel saw. Like, Hey, Horn said to you, don't do this because its gonna be hard to see a victory in terms of dollars and cents. So, that does happen, but I think that's increasingly rare, Dan, because it costs so much to litigate. So even, you know, well, all folks go, eh, this is a questionable spend use of my dollars.

Daniel Straffi Jr.:

Well, especially in a trial context with the amount of litigation funds that judges are inclined to give to attorneys, which are necessary, mind you. But we're talking about tens of thousands of dollars upfront before a trial and the years that go by before we even get to that point. As far as attorney's fees are concerned, it's tough to keep all of that in context for folks when they're in the middle of it.

Jeff Horn:

A hundred percent right. I try to say to people. I wanna be one of your greatest investments in your life. I wanna be like a 10 to one investment. So every dollar you spend on me, I want you to get 10 back. That's the goal. Those that have that mindset do tend to use our services consistent with their goals and not consistent with their fire in their belly or anger or disappointment or their cheerleaders. There are people that are in their ear. And they make decisions based up on maybe not their own best interest.

Daniel Straffi Jr.:

Now when we get into the issues associated with a divorce, I think overall it's rather common knowledge that domestic support obligations like child support and alimony are nondischargeable in a bankruptcy. Do you find that clients have a general understanding of that or is that something that you talk about? Do you talk about bankruptcy issues at all in your consultations?

Jeff Horn:

Well, If it's on a radar for sure. Some of the details of bankruptcy that I've got a grasp on, I wouldn't say a grip, but a grasp, are tougher people to follow. When they come in and maybe they've got this pile of debt and they're looking at a divorce and a Chapter 13 at the same time, and what can be rolled in and what can't be rolled in and the fine points. I don't try to pretend to know all the fine points. I tell them, assume support obligations including counsel fees that were ordered are not gonna be so easy to rid off. Equitable distribution if you're talking post divorce. Assume you are not getting rid of any of those obligations to your spouse. That's what I generally tell them. I say, call the experts. Don't count on what I'm telling you. Even if you're snapping back to a couple cases I had. Particularly when things were rough in the economy and people had developed properties and they had a lot of debts, we're talking big debts, like millions and now there's divorce. Don't count on the family court and having a deep understanding what's happened in bankruptcy court. So kind of like get clean in one area and clean on the other at the same time. Don't try to cross pollinate those problems to confuse one judge in the other realm because my suspicion is they know the tricks.

Daniel Straffi Jr.:

I think that's a fair statement overall, and there's a lot of deference given to what takes place in the underlying State court with the divorce in the bankruptcy realm. So you can't take that for granted that bankruptcy will be a cure all, or you'll get a second fight at the Apple.

Jeff Horn:

That's what I sense and I think people sometimes will come with the idea that it would be easy to get rid of a family court obligation in bankruptcy court and my words are always cautionary rather than encouraging off the bat.

Daniel Straffi Jr.:

Now in negotiating a settlement or making an offer. Do you keep bankruptcy principles in mind as far as trying to get more into an alimony award than on an ED side of things, or does that ever come into play?

Jeff Horn:

It really was and right now I have a case in particular that's teetering. There's complexity. There's a forensic accountant involved. I could see a bankruptcy actually simplifying the divorce. There's a pile of debts that nobody wants. People saying, oh, secret debts, everyone's pointing at the other person but these are not like a credit card or a cash advance. These are much bigger debts. Then to each pointing to one another and I almost go, well, if we got these debts managed into a Chapter 13, okay, here's the payment and now someone's gonna make the payment. It would crunch down a lot of the arguments about what is there and what's not there. What should we put into a support piece? What should we put into an equitable distribution piece in that particular case. It could be really creative. The folks right now are in such a place of mistrust that I don't think they're going to cooperate, but if they did cooperate, they'd really manage the debts and they both have more money in their pocket.

Daniel Straffi Jr.:

Is it more in a business context, like as far as tax obligations, SBA loans, things of that nature?

Jeff Horn:

A hundred percent. Most business debts, personal debts that are tied to the business. SBA loans that are not being paid for five years. A ton of tax debt, multiple businesses. And it's not a bankruptcy'cause the parties don't earn money. They earn a lot of money. And yet there's these debts and then the pointing, blaming, et cetera, that's stopping them from just taking a deep breath, cooperating, managing these debts. I mean, they're gonna pay off a lot of their debts. Even in bankruptcy, imagine they would pay off a lot of their debts'cause they have substantial incomes, but everyone would have more cash in their pockets this month and they would have the ghost of the creditor that chasing them or creditors that are chasing them. They could put those ghost to bed and sleep at night.

Daniel Straffi Jr.:

I always tell clients 50% of what we do is provide relief from financial distress. The other 50% is that relief from emotional, mental distress that inevitably leads to physical distress because you're not sleeping, your health is becoming poor. You've made mention of Chapter 13 which we know is a reorganization. Sometimes just getting that respite from your creditors and being able to extrapolate that debt out over a period of three to five years interest free. When you have people who have the income to do it, that break can mean a lot especially with the nature of interest rates these days. I hope these two folks, one is my client and one's not my client, hear your words and echoes through their mind, and I think that really could benefit from it.

Jeff Horn:

That's a case that's on my mind. It seems like bankruptcies may be going up a little bit right now, and uncertainty is out there in the marketplace. And like you said, the interest rates have gone up tremendously the past couple of years. Expect to have more and I cheated because I knew I had to do this, so I did a little lookup. And if you look at the bar chart, bankruptcies went down a period of time and I did a divorce thing. They went down a period of time, and they're both going up right now. I think volatility contributes to filings in both realms.

Daniel Straffi Jr.:

I would absolutely agree with that. They're so interrelated, we know that financial distress can often lead to the breakdown of a marriage. People hide things, their communication lessens, it provides that rift. Now, if one spouse ultimately files bankruptcy during a divorce, how do you handle that? Are you the first to know, are you the last to know whether, if it's your client or not? How do you find out and then what do you do from there?

Jeff Horn:

It's a great question. If it's my client, I hope I'm among the first to know. I have a good relationship with the client. We're gonna be working together on that. If I know my client is looking at bankruptcy, I'm gonna try to get my client's consent to communicate with the other lawyer and share with them. This is part of a strategy and we want you guys to at least consider joining this strategy. And those that do, I think are those that get the best financial result. And as you're saying, get that good night sleep. Get that monkey off their back. But sometimes they won't talk and they won't even have it. And then they get the lawyers, I've had lawyers get mad at me when I say, Hey, just so you know, client X is looking at bankruptcy, consult with a bankruptcy lawyer. So back to your question I'm gonna let the lawyer know. Let's assume I know, okay. But the way you find out is you all of a sudden you just get a notification from the bankruptcy court that you're on a list of creditors. That's pretty harrowing way to find out what's going on in a case. No one likes that. But I've had that happen. I've had my own clients, not that often, but more often someone else it's like tangential to the case, but we're just like a party that's being notified of a bankruptcy. We're on some list of creditors where even if we're not owed money per se, but it's something we're gonna provided notice with. And then, the next part I think you started to allude to this, it is like a smoke bomb in the family court. So the family court finds out and our courts here, I gotta say, they are wonderful, efficient, they do absolutely the best. They move these folks from A to Z, in an efficient way but that's a curve ball. They see it but somehow it's never the same exact procedure every single time. You know, you're a sports fan. Is it like injured reserve? Is it like the commissioner's reserve list where just put to the side?, Does the family court continue to manage the case and just bring us back every, 60, 90 days to go? Where are we with the bankruptcy?

Daniel Straffi Jr.:

Does it go totally to the inactive list? Never to be found again.

Jeff Horn:

I've had a five-year-old case because both parties went bankrupt at different times and just nothing happened. Oftentimes when folks are going bankrupt and they divorce, they're not paying their lawyers. So now the lawyer backburners it or gets out the case and the parties, they're not represented. The lawyers are gone. So no one knows how to restart it. There is an abyss that some bankruptcy filings create, you have to be a jack of all trades in so many ways. You've gotta know not about bankruptcy. You've gotta have a working knowledge of the nomenclature, automatic stay, what's stayed, what's not stayed, what you can't handle, what you can handle. That relief can be granted from an automatic stay. You have to know those basics. I would think maybe a couple of more things too. But those basics, it does tend to put cases in a different loop than the regular divorce case.

Daniel Straffi Jr.:

I really liked your answer about reaching out to the other side, when you're contemplating in the first place. Do you find yourself when you're trying to strategize an approach with a divorce with your client, trying to speak with the other side about whether or not it's appropriate to file before a divorce or after a divorce? What comes into play in your communication with both your client as well as perhaps opposing counsel?

Jeff Horn:

Yeah, so let's just assume for the moment that no one's filed for divorce and now we're gathering the information needed what we call in family court, the case information statement. It's kind of the same in bankruptcy. It's kind of the same info is gonna be needed. All of a sudden you see this pile of debt and these debts which are going to be paid, which are going to be forgiven, which is like something that might go away by its own weight but not the IRS, not the SPA, not the mortgage company. Not the car loan. Maybe your aunt's loan. Loan just a long ago to buy a house. Just want to let that go. You know, we had to make that judgment call early on, but if there's a pile of debts, and as I say, I only find that pile of debt in the beginning of the case, a case where there's a lot of income, because a lot of times folks that have already maybe they didn't have such high income and they got in some trouble with some consumer debts. They might already have gone through bankruptcy. That's not uncommon. They say, oh, we did bankruptcy two years ago. So now they're not in bad shape with debts. But the folks who come to me are always with a bit of a complex financial picture on top of the debt. Look, I'm the first guy to go. My job would be really easy if instead of a huge pile of debts we can pay. It was a thousand a month payment to the trustee.

Daniel Straffi Jr.:

Takes a lot off your plate.

Jeff Horn:

And even if it's 2000 a month, I can manage that with income. But when I don't know what it is and it's going up every month, the IRS and it's interest and it's penalties and no one has a statement for the past two years. They throw them in the garbage. It was 60,000 now it's 85,000. Those are the things were I just wanna go, okay, if we know all the facts. Let's get a consult. Let's get one bankruptcy lawyer. Not for a different ones. That's when people really are suffering, the horrors of mistrust when they go, I can't even trust that bankruptcy lawyer who doesn't know either one of you guys. They don't care. They don't have a bias. I mean, I'm biased for my clients. I want them to get their best deal, but if I'm the bankruptcy lawyer, bankruptcy lawyers not gonna say, oh I'm for this person'cause that person did this or that. They just wanna get them to the process and get them to that reasonable payment that manages that huge pile of debt that turns into free loan for five years. Who wouldn't want that if in you're trouble?

Daniel Straffi Jr.:

Exactly. And is there a certain point in your analysis of a case, whether it be before the divorce complaint is filed, or more commonly during the discovery process where you are seeking out a professional aside from yourself, whether it be an accountant, a bankruptcy attorney, to kind of provide your client with guidance?

Jeff Horn:

In accounting world, you talk about fair market value, which starts with the premise that both sides have equal perfect information about the transaction? Well, I never have perfect information at the beginning of the case. It's almost in the breach that I know everything I need to know in the beginning. And my client has a good sense of where the other party wants to go. Let's assume we have this whole thing. We've got business, we've got debts, you know, do you know you guys want to do with building or you want to do with that business. People don't know. So my experience is they don't know what they don't know. You start going through the process and I can't do another thing unless you tell me where we are with the potential for bankruptcy. I can't do another thing unless I have an evaluation of a piece of land or a piece of property. I can't help further without that data point. The court's breathing down their neck, it has to be sometimes for decision making. Then people will make the decision, we know that about our species. We tend to be more reactionary to pain than we are to good decisions when we're under stress.

Daniel Straffi Jr.:

I think also when we are under that stress, we feel it out there, even if we're not addressing it directly. We tend to dig our head in the sand and wait for it all to come up at once and address it all at once. And sometimes it does take an accountant to dig into things from a fact finding perspective. Before you're gonna have everything that you need to make those informed decisions. Now, divorce at the end of the day often means splitting one household into two. How do people from your end handle the financial pressure of that change, and what do you do to help guide them through that process?

Jeff Horn:

Yeah, I mean, if I was in charge of the world, I would go back to one thing that we enjoyed in the early 2020s was these low interest rates. My job when people could just go and get a 2% or 3% rate, and they could separate into two, and both parties, mortgage payments is like comparable to what they had when they had a 6%. It was manna from heaven for us. Then it went from 2% and something to 7% suddenly. You know, it's a couple of years since that happened, since the interest rate zoomed up, but we're still suffering because if someone comes in and they've got a bunch of equity in the house, but their spouse is on the debt, and the spouse goes, you can keep the house, or we'll make a deal, but I want off that mortgage. And that person has to call up the bank and go, I need to refinance 500 grand. And they go, okay, great. Your mortgage payments doubling. They faint immediately, and I get that, it's a big deal. What I have people do rather than try to get them to make all the decisions at once to go, okay, let's work through it. If you stayed, what does it look like? What's the dollars and cents? I can run an amortization for them on the computer. So easy now, and If you're going to move. People come in, right? They go, I have to stay in the same school sending district because my child passed three more years of school. Something like that. Okay, let me know where that looks. What does it look like? What's the availability of houses where you could go from house A that go from the big house to two house Bs, right? Can both of you guys stay in the sending district? Is it possible? That's the dream scenario. It's been much tougher. Rents the past few years went through the roof, interest rates, went through the roof, I just try to boil that down to dollars and cents. Some folks have some surplus funds where they can take money out of an investment and use that as the cushion to get through these three years hypothetically. And keep them in the house or pay that increased mortgages that's going to pop up with the no interest rate.

Daniel Straffi Jr.:

And I mean, what would once be, like you said, an easy buyout scenario because money was so accessible at a lower interest rate, I would imagine that now you have to be a bit more creative in trying to help folks keep their marital residence. Does debt come into play in that regard as far as an assumption of debt on one side?

Jeff Horn:

Yes, absolutely. I just had this scenario. The case is with businesses or people that have a lot of assets, but they also have a lot of debt. Those are the ones where you have more to lose, but also more creativity. One case we just did the folks have done something that I don't love, but they've done it. They hung on to marital home debt in both parties names. Huge pile of other debts, business and related. One party took all of those debts on and the idea was exactly what we're talking about. Get their trial to the end of high school and then someone can buy out.

Daniel Straffi Jr.:

Then we'll deal with the house.

Jeff Horn:

And one person, you know, I gotta give this person a lot of credit. They really put their nose to the grindstone and got rid of those nasty debts that had arisen during the marriage. They both managed to make these payments, and now they got to the end of the road for high school, and then they can make a decision now. And they're in the middle of that right now. IE someone buy out and the debts are gone. The other debts are gone. Like they've really done a good job or sell and have an allocation of the proceeds after sell. They can make a decision, but that's really a high level of cooperation that I encourage folks to embrace.

Daniel Straffi Jr.:

To try to undertake at least and punting the issue of the marital home. Not that you're not addressing that credit presently, but to give yourself an opportunity maybe for interest rates too lower, to give yourself more opportunities. All of that has to come into play and the fact that you look at things creatively and thinking outside the box is so important to your clients.

Jeff Horn:

I appreciate that. And of course, we've put you to work many times as the mediator I go, oh, you have a lot of debts and you're getting divorced. And I have the guy, he can help us navigate what to do with debts. He can talk about divorce. You know, that kind of puts you in the cross hairs of a lot of business where people have to manage both at the same time.

Daniel Straffi Jr.:

But it speaks to the fact that divorce today, it really requires a comprehensive approach. There's just too much at stake across the board. We need, in most scenarios, two incomes to maintain a household. And when you're accustomed to a certain lifestyle, and now we have two different households trying to make it. It requires a level of detail and strategy and thinking outside of the box to really make it work for people so that they can get that fresh start.

Jeff Horn:

Sort of teenage children and now here comes a car and car insurance. And those expenses around the corner. And then, you've invested some money in college. That's how I look at it. I don't know when the payoff.

Daniel Straffi Jr.:

I like the word invest. That makes me feel better already.

Jeff Horn:

There'll be a payoff. But here comes another demand on your cash that you have on hand or new debt with payments. That, unless I'm slow on this, pretty hard to get rid of student loans, parent loans in bankruptcy court.

Daniel Straffi Jr.:

It is. And I have had a tremendous uptick in people seeking student loan consultations because of the new administration. They're making it a point to collect more aggressively. Whereas the prior administration was looking to forgive or defer. So all of that is coming to a head. It will require ongoing creative solutions because some of these student loan payments are like mortgages. So, now in the cases where you have had divorce and bankruptcy collide, is there some kind of tried and true rule or approach that you've taken from it that you can say, generally speaking, you need X, Y, or Z. When those sorts of intersections occur?

Jeff Horn:

As I was saying, you've gotta have a tool belt with two sides of it. One is the tool belt of understanding, there's an automatic stay. What's going to be in, what's going to be out, that the divorce doesn't have to stop. It doesn't have to be totally multiple. Just certain things will be stayed. Enforcement might be stayed on some things. It doesn't mean you can't work on the other technical pieces of it. And then the other side is if its one party filing the non-filing party almost always sees red. It's another betrayal. It's another mistrust. It's another thing to get really upset about, and that's our biggest job, I think, is just to bring that person back and say, yeah, this might cost us a few months. We might be in no man's land for a short time. And yeah, there might not be enforcement. There might be a couple of things that's gonna derail us or maybe the bankruptcy court's going to have to do something kind of drastic. I sell an asset, right? Because it's just what they've gotta do. The trustee, just gotta do that. That's gonna take more time. You know, just try to let them know and give them a kind of a roadmap. We've all feel a blow if there is an unexpected bankruptcy filing in the divorce case. Don't do that to me. Let me know. I'll try to do the same and see if it makes sense for my client to join, right? The times when one party filed, let's say maybe it happened 30 times, I bet you 20 of those times the parties would've benefited from working together. Maybe 25 times.

Daniel Straffi Jr.:

Some type of joint filing.

Jeff Horn:

A joint plan, whether it's filing or not filing. It would've benefited from not doing something that they thought was going to only advantage one side versus the other.

Daniel Straffi Jr.:

A cohesive strategy. Regardless of whether you decide to file jointly, let's all be on the same page as far as approach is concerned.

Jeff Horn:

There's no question that would've saved parties grief and likely professional fees as well.

Daniel Straffi Jr.:

Yeah, and I like what you said at the beginning of your answer, just because a court puts a case on an inactive list as a result of a bankruptcy filing doesn't mean that the parties have to be inactive. You can still work amongst yourself to try to get to an end with your divorce. There's plenty to discuss, that's for sure. We kind of have a couple of questions that, rely upon your overall experience and wisdom. If there is one thing that you could change in the law to better support divorcing couples dealing with overwhelming debt scenarios, what would that be?

Jeff Horn:

I like that you put me in charge of the world. I don't think my kids would appreciate you. You know, they already say, dad, you think you know everything. I always joke for people that know everything, meeting a know-it-all is the worst thing in the world. I find that we ought to have written somewhere in very clear language that debts are not bad, number one. Number two, saying that you don't know about a debt, a secret debt is okay for shaping your thinking and explaining why you're mistrustful of the other party. But it's still a debt. And number three, my cases and I counted them up. It's thousands of cases in family court over the years. In all my cases, I've found zero times where a party took a position that a marital debt was not something they were willing to address in a settlement or an equitable distribution. Where at the end of the day, it saved them money taking that position. They might have not paid that bill or another bill. But the cost and professional fees and then dragging the case out, calls them on a net dollar basis to have less dollars in their pocket at the end. I'm pretty sure that's a hundred percent true and people can get mad at this and go, well, what if they model my spouse, spend 2000 bucks on a vacation.

Daniel Straffi Jr.:

That's an obvious one. We could point to that one.

Jeff Horn:

I'll give you that. I'll give you sending flowers to a love interest. But if you go, okay, let's spend a lot of time and money and accountant and lawyer time. You want your lawyer to review every credit card statement and bank statement for the past five years, and you get a huge bill, it's maybe wasn't the best judgment all the time for the spouse, but at the end of the day, we're not going to say that's not subject to equitable distribution. I would want that warning to be like a cigarette box warning. Warning, if fighting over every dollar of debt in equitable distribution will cost you money. That's what I want. Put that warning label on divorce.

Daniel Straffi Jr.:

Dissipation of assets is the heading for so many grievances for folks. And it can be a slippery slope as far as investment in trying to prove that.

Jeff Horn:

It is gotta be a lot of money, and you gotta be able to prove it inexpensively.

Daniel Straffi Jr.:

100%. Any final words of wisdom for our listeners who may be considering a divorce, Mr. Horn?

Jeff Horn:

Two different kinda listeners. Our listeners that might be other lawyers are gonna be mad at us right now because we just said, Hey, clients out there, potential clients don't do all these dumb things that give lawyers a lot of money for doing nothing. So all my lawyer friends, sorry, not sorry. For everyone else, if you put your cards on the table, kinda right away, and you find out you gotta lot of debts, don't go, oh, I feel guilty. I'm blaming my spouse, myself, my mother-in-law. Don't do any of that stuff. Consult with your divorce lawyer, your accountant, and get your lawyer to contact the other divorce lawyer and say, Let's have these folks talk to a bankruptcy lawyer. Most of them charge maybe nothing or a tiny amount to just review the picture. And I find that the bankruptcy lawyers are very clear in their analysis. They go, okay, you're a good candidate, you're a bad candidate. And Dan, you know, because you have a tend to go in both of these areas, you have that ability to go I can absorb that emotional piece. Some of our bankruptcy colleagues are more mathematician kind of guys, more science guys. You need art and science here to handle folks that are upset because their marriage is failing. And also they've gotta deal with debts, but they're not the same.

Daniel Straffi Jr.:

100%. It requires a balancing on both ends without question because of that emotional component. Thank you so much for all of your time here, Jeff. How about a plug? Tell us what's going on with you personally. You always have your hands in a variety of things. Tell us about Horn Law Group, what you guys are up to?

Jeff Horn:

Well, first of all, it's crazy that we're talking because we've spoken so many times and all of a sudden it's like an hour. We've been at this for a long time now. it's my pleasure. My friend's like you're still working? I'm like, what? I'm gonna keep working as long as I can. My daughter, she's a college senior and she goes, dad, do you do something different every single day? I really do. I work on the second floor, so I come up the steps and I never think of going back down and say, forget this I'm going home. So we blog a lot. We put a lot of stuff in on our website and working on more stuff. Now I'm working on a journal I would make available to the world for people to work through some of these questions that are bugging them. We're literally working on that today. Myself and Dylan, who's our summer intern. He must be a lawyer someday. So, it's always on my mind and how to make this a little bit easier for people. And that's another tool. Feel free if people wanna check out the Horn Law Group, hornlawgroup.net. Dan, a pleasure again.

Daniel Straffi Jr.:

Thank you so much, Jeff. And thanks everyone for listening. Have a good day.