How to Keep Your Home After a Divorce

divorce homeGoing out to purchase your New Jersey home together with your spouse, you likely didn’t give one thought to what would happen to your dream home in the event of divorce. Most married people don’t see themselves splitting up, but the unfortunate reality is that it does happen to some couples.

If you have found yourself separated and/or divorced and wondering what on earth happens next regarding the family home, rest assured that there are some things you can do to make this transition easier.

If the split was amicable, sit down with your soon-to-be ex-spouse and discuss what you both would ideally like to do with the property. Hopefully you will both agree, and can take steps toward writing your Property Settlement Agreement together.

Let’s assume that you received the home as part of your PSA. While that likely made you quite happy, the reality of keeping your home without your spouse’s income can quickly bring you right back to reality. You may find yourself thinking, “I can legally keep this house – but can I really afford it?”

By working closely with a NJ real estate attorney who specializes in keeping people in their homes, you’ll learn about all of the options available to you.

If you had been married for a number of years, it is possible that you may have to re-learn how to live on one salary. In fact, it’s very possible that you weren’t even involved in taking care of the finances at all. The first step in determining whether or not you can legitimately afford to stay in your home after your divorce is to take a good, hard look at your budget.

You must determine exactly how much cash flow you have coming in every month (your income plus any spousal or child support, if applicable). Next, make a very detailed chart of what goes out (your monthly expenditures) – from all of your utility and auto bills all the way down to your newspaper subscription. Include the mortgage payment when calculating your outgoing bills.

After you’ve run all of the numbers, if you come out with money left over – congratulations! It looks like you’ll have no problem retaining the family home. Removing your spouse’s name from the mortgage documentation will be the next step for you.

Let’s say you didn’t end up with any surplus after figuring out your monthly budget. Does this mean that you definitely cannot afford to stay in your home, which would give you and your (potential) children stability during this tumultuous time?

This is where your real estate attorney comes in. There are a variety of ways to keep your home even when it seems like the impossible. You may qualify to modify the original loan by extending its length, lowering the principal amount due, forgiveness of late fees or a lower interest rate. All of these may make your mortgage something you can legitimately afford.

If you make enough money on your own, you may be able to completely refinance your mortgage, thereby putting the mortgage in your name only. Mortgage refinancing will result in a brand new loan, making the old one invalid. It’s best to go this route when mortgage interest rates are down, and if you have a very good credit score.

Want to learn more about how to keep your home? Interested in investing in real estate? Want to learn how to buy foreclosed properties and flip them for profit?

Come out to the Real Estate Seminar for Everyone this Saturday, April 25th at 9:00AM. Click here for tickets and more information.


Image by Mark Moz licensed under CC 2.0 

Can I Keep My House Without My Spouse?

Part Two of our series about The Financial Ramifications of Divorce addresses the issues surrounding real property, and things to consider when it comes to keeping the house or selling it.  There are, of course, many good reasons why one spouse might want to keep the home after the split – stability for the children, staying in the same school district, comfort, and a perceived inability to afford reasonable housing elsewhere. Regardless of your reasons, it is extremely important to do your research before deciding whether or not to keep the house after your spouse has moved out.

Things to consider include:

  • The current value of your home
    Fair market value is the amount that you can expect to get if you sell the home in the current market. You can then determine your equity by subtracting the debt owed against the home from the fair market value.
  • Your ability to qualify for refinancing
    You will have to refinance the mortgage into your name alone, and to do this, you must qualify for refinancing. Having someone co-sign for you is a good backup plan, if you don’t qualify alone.
  •  Tax effects
    Don’t forget about the mortgage interest deduction and the fact that it may decrease your tax burden, therefore increasing the amount of your income that is available to you, making it possible to keep the house.
  • Your monthly budget
    Many people who have been married for a number of years are out of touch with their own monthly budgets and financial responsibilities, simply because the other spouse handled all of the finances. Become familiar with all of your monthly obligations in order to determine your true ability to keep your house without your spouse.

As long as you can easily afford the mortgage payments, qualify for refinancing (with or without a co-signer), and have considered all potential taxes and monthly bill obligations, keeping the house and the associated stability should be well within your reach. However, if you determine that it looks like the payments will be uncomfortable for your budget, it may simply be a better idea to sell the house and look for something more affordable. It is important during this time of decision-making to consult with several professionals – your financial planner, an attorney experienced in handling loan modifications and refinances, and a trusted family member or friend.

Above photo courtesy of Mosman Council

The Financial Ramifications of Divorce – Part I

Everyone recognizes the emotional distress caused by divorce, but what about the financial ramifications? This two-part series will address several possible financial scenarios after couples split up, and how to ensure that you handle each situation appropriately. Today we will talk about joint credit card debt, and who walks away with the associated liabilities after separation.

Sometimes, in divorce proceedings, credit card debts are not given enough attention due to more pressing financial issues, such as child support calculations and dividing retirement accounts. At Veitengruber Law  we trongly advise our clients to enter into their newly single lives with no joint debt, due to the possibility of the other party filing for bankruptcy or simply not paying his or her due portion.

Credit card companies do not have to abide by divorce decrees, so if your ex-spouse doesn’t live up to his end of the agreement, creditors will ultimately end up chasing you for the amount due plus any late fees. In order to avoid this potentially disastrous situation, make every attempt to pay off any joint credit card debt before you are handed your divorce decree.  If paying it off in a lump sum isn’t possible, divide up the total amount onto separate cards in each party’s name, and make sure that the joint account gets cancelled.

In the event that your divorce is already finalized and nothing about credit card debt was put onto the court record, there is a distinct possibility that your ex-spouse will continue to use the card(s) – ultimately ruining your credit along with his.

If your split was not amicable, things can get ugly if joint accounts remain. Some couples end up in a game of spite, charging more and more items onto joint cards just because the other party did the same thing. In cases like this, you may find yourself drowning in debt and wondering if you should file for bankruptcy.

In today’s society, filing for bankruptcy does not carry the disastrous stigma it did 50 years ago. It’s not an ideal situation, but it can be a necessary solution for some newly single people who have no way to pay off debts that were incurred while married. It’s important that you stop charging anything and resolve to buy only what you can afford with the money you make.

Seek out a qualified attorney to help you determine if you can set up a payment plan with your creditors or if you do, in fact, need to file for bankruptcy. Naturally, this should be your last resort, and all other avenues to resolve your debts should be explored first. Once you declare bankruptcy, you can’t do it again for eight years, so you’ll need a professional to tell you when it’s really time to use your trump card.

Next week we’ll talk about keeping your house….without your spouse.

*Above photo courtesy of Meddy Garnet