Divorces are financially draining, often requiring you to deplete your savings or obtain loans during the process to cover lawyer fees, expert witness fees, and other costs. Whether a divorce loan is right for your divorce is making world news after a Chinese businesswoman sued her young employee after loaning him money for his divorce.
Big Trouble in Little China
A businesswoman named Zhu from Chongqing, a city located in south-western China, is counting her losses after giving a former employee she had an affair with Rs 3,000,000 (US$420,000) to fund his divorce and payoff his wife for child support.
The younger man, known as He, joined Zhu’s company while both were married to other people. Zhu quickly developed feelings for him and the two began an affair. They agreed to divorce their respective spouses and start afresh together.
To help her young lover divorce his wife, Chen, Zhu transferred three million renminbis directly to the wife as settlement. The sum was described as “compensation” for the divorce and as financial support for the upbringing of their child. With the money paid, He finalized his divorce and moved in with Zhu.
About a year after moving in together, Zhu and He decided they were incompatible, and separated. But then Zhu demanded her divorce loan back. Ultimately, Zhu filed a lawsuit against the now divorce coupled, He and Chen, and demanded they both repay her divorce loan to He.
Florida Divorce Loans
I have written about international divorces and marital debts before. In a dissolution of marriage, whether to classify loans as marital or nonmarital may depend on a few factors. For example, when was the loan given, what was its purpose, and were the purposes marital or nonmarital.
Generally, the cut-off date for determining whether a loan is marital or nonmarital is the date of the filing of the petition for dissolution of marriage, unless otherwise agreed by the parties. Accordingly, any loans incurred before the filing date are presumed to be marital liabilities unless proven otherwise. However, loans incurred after the filing date are generally classified as nonmarital liabilities unless they meet specific criteria.
House of Flying Daggers
During the first trial, the court sided with Zhu, arguing that the funds violated public order and good customs, thus deeming it an “invalid gift.” Consequently, the court ruled that the money should be refunded.
The divorced couple, Chen and He, then filed an appeal. An upper-level court determined that Zhu had not provided sufficient evidence to prove that she had gifted the money to Chen. Instead, the money was classified as a payment made on behalf of He for divorce compensation and child-rearing expenses, stated the appellate court.
The appellate court said Zhu had failed to prove the payment was a personal gift to Chen. Instead, it was regarded as money He owed his wife as part of the divorce settlement and for child-rearing expenses.
The upper-level court also criticized Zhu’s conduct, observing that she had used her wealth to hasten a divorce, and then sought to undo her gift when the romance faltered. The judges noted her lack of integrity in attempting to reclaim the payment under such circumstances.
The South China Morning Post article is here.