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Preventing Foreclosure In Divorce

A married couple that purchases a home oftentimes does so jointly, meaning that the loan obtained from the bank and the title to the property are in two names. When a couple divorces, one of the largest assets that will have to be divided is the home. If a couple is unable to determine what to do with the home, they may face foreclosure.

What are my options to prevent foreclosure?

The best bet to avoid foreclosure is to decide as early as possible if one spouse will keep or the sell the home, pay off the mortgage, and/or split the remaining profit. Depending on which route they choose to take, their options for avoiding foreclosure may differ.

What if i want to stay in the family home?

If one person wants to keep the home, there are steps that must be taken to transfer ownership of the property from a joint title to a single title. There are a few different choices are available to avoid foreclosure.

Keep the family home by:

  • Assuming the mortgage and taking over responsibility for the loan
  • Refinancing the mortgage and putting the property in one spouse’s name
  • Restructuring the loan for a more affordable payment

Many of these options will require that both spouses agree on what will happen to the property. Joint title and joint loans mean that both people are responsible for what happens with the home, and if they cannot agree on how to move forward, it can require legal intervention.

What if no one wants to keep the home?

Sometimes, selling the home is in the best interest of both parties. Making regular payments on a house can get extremely expensive, and the home can carry a lot of unwanted emotional baggage for whomever remains there.

Another option is to rent the home out in order to pay off the mortgage. However, if no one wants the house, selling it is often the best course of action. By selling the home, a couple may be able to pay off any owed mortgage on the house, freeing the owners from having it foreclosed upon and affecting their credit even further.