Dividing property during a divorce can be a difficult process, especially in such a depressed housing market. Traditionally, divorcing parties might sell the family home and split the proceeds. Now they often own property that is "underwater" (where the value of the property is less than what is owed on the mortgage). In addition to the emotional upheaval of leaving the family home, couples must also deal with limited options in creating a fair property settlement.
Nearly 40% of couples postpone divorce proceedings because of a real estate albatross. This article will highlight some tips that help people considering divorce make informed decisions about moving property.
Does it make economic sense?
Couples need to make an honest assessment as to whether they should sell the home at a loss, or keep it until the market improves. The old adage, "divorce is a business transaction" rings true in these situations.
The parties should create a plan to minimize risk and financial exposure. This could include seeking a loan modification as part of (or before) a property settlement agreement, attempting a short sale, setting a time limit for keeping the home, or agreeing to indemnify one of the parties in the event of a default on the loan. Depending upon the parties' financial situation, they may want to consult with a bankruptcy attorney before deciding if or when to file for a divorce. Whatever decisions the parties make for the division of their marital property , it should be a carefully documented financial plan that both parties can understand and with which they agree.
Are your emotions in line?
Dispassionate financial decisions work best in the long run, while emotional decisions are fraught with complications. When emotions are involved, a party may feel entitled to something, since they essentially have lost something in return. For example, a victim of infidelity may feel like they must be compensated for the pain they have suffered. Because divorce is a time of tremendous psychological stress, it is best to consult an expert when making important decisions.
Consider all options
As mentioned earlier, people are postponing divorces and making other concessions to maintain financial stability. Some couples are living together to ride out the recession; even sharing expenses, childcare responsibilities and household duties. While not all couples will follow this standard, successful ones will incorporate good communication and set appropriate expectations to make the divorce process easier.
If you are considering divorce and need advice regarding property division, contact an experienced family law attorney today.