Divorce & Foreclosure are hand in hand these days. Divorce is expensive, and everyone knows this fact. Divorce often leads to unexpected costs. People understand that divorce can be expensive when it comes to hiring a lawyer. What people don’t realize is that they are going from a combined income where they are paying for their combined costs of living such as power, mortgage, insurance, water, food, and groceries from one combined account, to now having to separate those costs and pay for those things individually. Additionally, there are new costs such as the previously mentioned legal feels, counseling costs, court costs, and sometimes spousal or child support. With all of these additional costs, and no additional income, people get into trouble, and the marital home is sadly one of the biggest sources of contention in a divorce because it a constant drain on both parties emotionally and financially. We’re here to help you figure out what your options are, and what comes next.
Tips for Handling a Foreclosure:
1. Communicate with Each Other: Divorce is hard. It is difficult to handle your own inner emotions and deal with external conflict. However, normally, people are financially jointly tied to a marital home. In order to help yourselves as a couple, and your own individual credit, it is best to speak with each other. You don’t want your best defense to be – I thought the other person would pay the mortgage…
2. Communicate with your Bank: Banks don’t want to foreclose. They would rather someone consistently pay their mortgage payment and keep their home. There are multiple options that banks can offer if you simply request to work WITH them. They are normally helpful because foreclosure isn’t their best financial option either. Try calling your banker or better yet, go pay them a visit. It’s harder to ignore a problem on both sides if it is staring you in the face.
3. Communicate with your Attorney: Speak with your divorce attorney and, if the facts provide, your bankruptcy attorney or real estate attorney. There are many things they can do to help you with the divorce and financial difficulties. If you haven’t filed yet, something as simple as filing for divorce in order to get a Pendente Lite Order into place can keep you from having to work with someone who is being difficult to work with. It puts the court and banks on notice that there is a problem that has been acknowledged. Also, they can work with the bank or find someone who can help you work this out before it puts a dark mark on your credit. In some states, courts are consolidating divorces and foreclosure actions into one case in order to promote efficiency in the court system. This helps save time and money, but even these states explain that these courts can’t consolidate if the parties are postponing filing for divorce.
4. Know your Options: When it comes to foreclosure, there are other options that may help you in the long run. Although keeping the house is optimal, it is not always possible. You could try a short sale where you are selling your home for less than you owe to the bank. Provided you have hardship such as divorce and financial problems, the bank may qualify you for a short sale. You could try loan modification where either the two of you modify the loan so that you could sell the home at a later date. Alternatively with a loan modification, one of you could keep the home in their individual name by refinancing. The last option, which is the least beneficial idea, is to file bankruptcy as a couple or individually. This could discharge additional debts, so that you can focus on getting back on track financially.