The decision to get a divorce requires a lot of thought and self-analysis. It is a very hard time emotionally, and often people are looking to get through the process as quickly as possible. The property acquired during the marriage will need to be divided, and in the past, many couples would fight over who would get to keep the house.
Prior to the collapse of the housing market, a home used to be one of the major assets of a marriage, along with any retirement accounts. Couples who bought early in the marriage built up equity, and were able to use this when dividing property during a divorce. One spouse would "buy out" the other, and he or she would be free to use or sell the home.
Now, many homeowners have mortgages that are underwater, meaning they owe more on their mortgage than the value of the home.
Concerns About Debt and Foreclosure
This current reality has couples often trying to avoid being stuck with a marital home having little or no equity. Couples in this situation need to find a way to appropriately divide the debt of the mortgage.
Unfortunately these types of situations can lead to someone simply walking away from a bad mortgage, which could cause serious credit problems for both spouses. Divorcing parties need to take steps to protect their potential liability should one side default on the mortgage, either purposefully to get back at an ex-spouse or due to economic hardships.
There are many other questions that divorcing couples need to consider in consultation with their attorneys. If the decision is made to sell the marital home, what happens if the sale does not bring in enough money to clear the mortgage? Will the parties split the remaining debt equally? Will one party remain in the home until the market rebounds? What happens if neither party can afford to move out while the divorce is pending? Couples also need to be aware of the potential negative consequences to their credit rating should a foreclosure happen.
If you are considering a divorce and have a mortgage, you will need to know how best to handle the property division to protect yourself. With so many options available, speak to an experienced family law attorney in your area to understand what is best for your situation.
