WHEN COUPLES DIVORCE, WHO HAS TO KEEP THE HOUSE?
The major battles for divorcing couples used to be custody of children and possession of community assets. That was the rule for as long as people remember. However, in today's economy, the only valuables in many marriages are children. Prior to the real estate meltdown, divorcing couples would litigate over ownership of the family home, and such a fight was worth every penny spent, because ownership in real estate was a great investment.
Such courtroom battles are rarely seen today, because the family home is an economic liability; a hot potato that will likely burn whoever is left holding it. When a home is upside down (that is, worth much less than is owed to the lender), neither spouse wants the house. Each spouse's goal becomes getting off the loan and walking away. The problem is the lenders are not willing to let either spouse off the hook for the debt.
If a mortgage is barely affordable for both spouses, there is no chance of either spouse qualifying for a loan modification on his or her own. The end result is that neither spouse will get to keep the home. Before spending time and money trying to refinance or modify the mortgage on a family home, divorcing couples should consult with their family lawyers about whether there is any real possibility of keeping the home.
Out of necessity, many experienced family lawyers have become skilled practitioners of mortgage law and debt law as they guide their clients through loan modification, short sale, foreclosure, and bankruptcy. Though facing life after divorce is extremely stressful in and of itself, facing overwhelming debt at the same time can push one past the breaking point. When starting anew with regard to family and romance, it may be the time to get a fresh financial start. If a family lawyer is uncomfortable with mortgage problems, debt issues, and bankruptcy, that lawyer should work with a lawyer who handles such matters. Filing for Chapter 7 bankruptcy protection has the potential to wipe away unsecured debts such as attorney should be able to determine whether the Chapter 13 plan can be modified to lower the planned payments or converted into a Chapter 7.
Another reason to specifically seek out legal advice on both bankruptcy and debt issues when considering a divorce is that divorce lawyers are not inexpensive. While lawyer's fees may be well-earned in a case of large assets, a thorough understanding of what assets are worth protecting and knowledge of debt protection will save the time and expense of litigating over "nothing." Legal fees can then be spent on what is important, custody and visitation.
At Fransen & Molinaro, LLP Marie Gray has been a family lawyer for 19 years and Gregg Eichler has been a bankruptcy attorney for over 30 years. They can work together to provide the fresh start many people need.