Divorce Marketing Group CEO Dan Couvrette interviews Credit damage expert Georg Finder about issues surrounding divorce and credit damage valuation for this Family Lawyer Magazine podcast.
Divorce and Credit Damage Valuation Podcast with Georg Finder
Family Lawyer Magazine recently spoke with credit damage expert Georg Finder. We thought family lawyers should be more aware of the issues around the subject of credit damage and its consequences—and Georg is a leading expert on the subject.
For over 20 years, Georg Finder has been setting the standard, for both plaintiff and defence, for expert credit damage valuation to juries, the bench, and to arbitrators. Many of Georg’s cases have yielded individual credit damage awards in excess of one million dollars. Georg is an author, a teacher, and an approved CLE instructor.
Dan Couvrette: Let’s get started by telling our listeners what a credit damage expert brings to a divorce case.
What a credit damage expert brings to a divorce case is the ability to get compensation for economic damage or harm inflicted through violation of a temporary restraining order or, more likely, through violation of the settlement agreement. If the credit damage expert is not brought in, that damage is not pursued by the attorney or the client, because they don’t know how to do it. I have the procedures to explain how to be qualified, how to value the damage, and can prepare a report to the satisfaction of the court that will give them a foundation to make an award for such damage.
In a divorce case, how can you tell if there is enough damage to bring in a credit damage expert like yourself?
Typically, it involves high value clients, and it typically involves real estate — whether it’s a high value client or not. The largest investment or economic responsibility that most people have is real estate: their home.
I had a case recently where a husband violated the terms of a settlement agreement. He complied with part of it in that he sold the property within the specified period of time, but in that interim from prior to the deadline of selling it he never made any of the mortgage payments. Since both the husband and the wife were on the mortgage note, both had late payments showing up on their credit report. That affected the wife and stopped her from getting new credit that would have made her life much easier. The negative reports that the husband caused by not making the payments led to credit reputation damage. When I came into the case, there was a ruling by the bench of $35,000 just for the four late payments.
Does a credit damage expert work directly with the client or do you work with the family lawyer?
I work with both. It depends on the preference of the law office. In some cases, I even work with paralegals on some of the basic information. The point is to get the proper information—standard credit industry documents—and organize, review, and analyze them in such a way that they are foundational to a credit damage demand.
How much value can be recovered in a typical case?
Every case is different, but from $35,000 to a million dollars. For some people, $35,000 is a giant amount of money and my return on investment is typically ten to one. It’s not about how many dollars, it’s how important they are to your lifestyle. For someone who has a million dollar property, $35,000 may not be sufficient in their mind to recover, but I think $35,000 in recovery is a lot of money.
Let’s use your example of a spouse not paying for the mortgage. Do the family lawyer and the client usually assume that the spouse will just pay whatever they owe on the mortgage without considering the possibility that both spouses’ credit has been damaged?
Absolutely. Whether it’s malicious or whether it’s inflicted by circumstances, when one party does not keep their promise to the expectations of the other party to make the payments, because that’s what was agreed upon in the settlement agreement, this sets one spouse up for a lot of financial suffering that can be recovered.
In the recent downturn in the real estate market—hopefully it’s now turning up—have there been instances where one spouse in a divorcing couple has not made payments for mortgages because they didn’t see the point in making a payment if the property’s under water?
There’s a huge problem when the credit agreement is based on the borrower keeping their promise to make payments until they either sell or liquidate the basis of the mortgage: the house. The selling price has nothing to do with the mortgage. Except when you acquire the property, but after that your payments are not in any way tied to the value of the property except in the borrower’s mind. The lender doesn’t care what the value of the property is. All they know is that they want to get their thousand dollars a month and you can live there as long as you pay the thousand dollars a month. If the property goes way up in value, they don’t charge you more and if it drops in value, they don’t charge you less. You have an agreement. The agreement is that you will pay this amount of money; the property value is a totally separate issue. It’s like saying I’m not going to marry my wife, because I don’t like her sister.
How long does it take to qualify economic damage due to a violation of the settlement agreement?
Typically, it’s three late payments. In today’s economy, three late payments can easily trigger a foreclosure. Simply the notation of a foreclosure harms the credit reputation of the people on the mortgage note. If either one of them does anything bad, they both suffer. The point of bringing in a credit damage expert is that if one of them does something wrong, the victim of that misbehavior or non-compliance can be compensated for the party whose promise was broken.
Where can family lawyers learn more about credit damage?
They can learn more about credit damage at my website which is www.creditdamageexpert.com. They will find very valuable information to improve the quality and efficiency of their case, and that is to be sure to get the correct kind of credit report on which to base their negotiations for settlement and their settlement agreement. The correct one is not the free credit report. The free credit report is very misleading and will lead to faulty or unsupportable conclusions, which will make everybody very unhappy.
I strongly encourage that your listeners go to my site and find out about the subscriber credit report, which you cannot get directly from the credit bureau. You must get that from a lender. On my site, I provide information on how to do so and that can make a huge difference as to the quality of the resolution of the case for your client. You should use the right foundational document.
Georg Finder, an Orange County, CA Independent Credit Evaluator (ICE), is an expert on credit reporting violations and credit damage measurement. He has more than 15 years experience evaluating credit reports and appearing for both plaintiff and defense. Mr. Finder has authored numerous articles, including his upcoming, Divorce Credit Smarter, Not Credit Out-smarted. He is a MCLE provider on credit report issues and credit reputation damage compensation. Learn more about Georg Finder and his services at www.creditdamageexpert.com.
Dan Couvrette is a marketing expert to family lawyers and divorce professionals. The CEO of Divorce Marketing Group, he is the publisher of Family Lawyer Magazine and Divorce Magazine.
Credit Harm & Divorce: An Overlooked, Recoverable Injury
The key to a successful argument for credit reputation damage that will maximize injury value is to present a thorough analysis of the “before and after” picture of the injured party’s credit situation.
A Holistic Approach to the Financial Aspects of Divorce
In divorce, valuing the business in isolation may cause you to miss key financial information. A comprehensive, 360-degree approach could yield radically different – and more accurate – results.