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 » 2013 » January

When The Marriage Ends, The Mortgage Does Not

If a marriage fails, the divorcing partners need to consider what to do about their mortgage.

Not all marriages last as long as the couple may have hoped for and when they make the decision to divorce, the mortgage on their house remains a silent partner in the proceedings. In effect, one is not just divorcing a spouse — one must also divorce the mortgage.

The housing market today is slow and with even tighter lending requirements, divorcing couples face an uphill battle to get divorced. Before the housing bubble burst, it was relatively simple to divorce, sell the marital home, split the proceeds (equity) and each buy another home. With the market the way it is now, this rarely happens. The home, once an asset, has turned into a liability — one that is increasingly difficult to discharge.

From the point of view of the bank financing the mortgage for a home, a couple will stay married and keep paying the monthly debt unless the home is sold or refinanced. However, when things happens and a couple can no longer stay together, they need to consider other options, and check them out with a great deal of care.  This means attempting to put aside all the emotions involved in a divorce in order to make logical and informed decisions, often with the assistance of an experienced Brandon divorce lawyer.

The main goal is to keep an eye on the long-term results, and move past the short-term pain of the divorce and losing the house. If a couple cannot move past the immediate issues and focus on the future, things are likely to be bleaker for them as they try to deal with financial issues. The main focus needs to be selling the house, as it still remains the easiest way to put a joint debt, like a mortgage, behind you.

Although selling the home may be the best solution, it is not always what happens, because the market is so unpredictable. At this point, the couple needs to look at their situation from a different point of view, by considering other ideas. For instance, could one of them refinance the home? Does one spouse have sufficient credit and income to remain in the home and continue with the payments? Is there another arrangement a spouse could make with a roommate to share the mortgage payment?

Nothing should be off the table when it comes to determining a way to settle the mortgage issue. Just because the house might not sell right now does not mean it will not sell later, when the economy begins to recover to a point where the housing market starts to pick up once again. Considering all options will make the divorce process easier to navigate. Getting stuck on what to do with the house should not be regarded as a stumbling block, but rather a chance to be creative in solving the problem. If you’re hung up on how to deal with the mortgage, ask your Brandon divorce lawyer for advice.

Joshua Law is a Tampa divorce lawyer and Brandon family law attorney with the Olivero Law To learn more, visit http://www.brandonlawoffice.com/

Posted on Friday, January 25th, 2013 at 10:52 pm under Divorce and Family Law.
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Debt reaffirmation is common in Chapter 7 bankruptcies

These days, debt reaffirmation has become quite common.

When it comes to reaffirming debts, this typically refers to secured debts, such as a mortgage or car loan, not the usual debts of unsecured credit cards or medical bills. Because each person’s debt situation is different, they should consult with a Brandon bankruptcy lawyer to determine if filing for bankruptcy protection is what they need to do in light of their present financial circumstances.

The general rule of thumb in declaring bankruptcy is people should let go of their house if it is clear they cannot afford it. However, if their debts have been wiped out in a Chapter 7 bankruptcy discharge, they may be able to afford a house. It used to be that loan security was to be found in the object – a car or house. These days, lenders seek a debt reaffirmation agreement with a debtor filing for bankruptcy protection. In fact, some bankruptcy trustees demand these reaffirmations be submitted to the bankruptcy court.

Deciding what to keep and what to let go for a Chapter 7 bankruptcy is difficult, and it is for this reason that a debtor would be best advised to consult an experienced Brandon bankruptcy lawyer about their options.  There is a different answer for every bankruptcy case; even more so in today’s shaky economy.

Facing a decision to let go of a home is traumatic, but in some instances, needs to be done. Prior to making that decision though, most bankruptcy attorneys suggest to their clients that they try and foresee the near future, in terms of the value of their property. At the moment, real estate is still on the decline, but does the market indicate a revival around the corner? Decisions like this are difficult to make based on a guesstimate of the housing market.

If the market looks like it will be depressed for some time to come, the best decision may be to let the house go in the Chapter 7 bankruptcy process, but this needs to be discussed with a competent Brandon bankruptcy attorney.

Another item that most bankruptcy attorneys speak to their clients about is buying a vehicle — one that is affordable, particularly if they are deep in debt with their current financing. What happens if they are in a bind financially, and they cannot afford their vehicle any longer, is that the lender usually repossesses it, at their expense. If the bankruptcy has already been discharged, the lender may also choose to pursue legal action to recover damages.

Shiobhan Olivero is the Owner and President of Olivero Law If you need a Brandon bankruptcy lawyer, Tampa bankruptcy lawyer, or Tampa bankruptcy attorney, call 813.654.5777 or visit Brandonlawoffice.com.

Posted on Tuesday, January 15th, 2013 at 10:46 pm under Bankruptcy.
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