The economy has trickled in some form or fashion into just about everyone's life at this point. While divorce statistics can be molded like any other numbers game, it does not take a mathematician to figure out that stress over money is at a high point..and this leads to marital problems.
It used to be that couples that found themselves unhappy could just file for divorce, fight over alimony, and pay all the lawyers when the house sold for a huge profit. These days, couples are staying together despite fighting over money, because they cannot jointly finance two households. Frankly, some are having a hard time financing one household, which brings the next point..more than ever before, houses belonging to good, hard -working, responsible folks are being foreclosed on. This trend is so pervasive that many people no longer feel the shame and embarrassment about this that they would have just 18 months ago. Stopping payments on the house is giving people the cushion cash - wise to allow two households to happen...and sometimes they are able to stay physically in those homes for months longer than you would think. Once the house is lost, lots of couples try to figure out how much further they need to let their credit go in order to get some control over their financial future, ie which credit cards to also quit paying and whether to declare bankruptcy.
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Some things to keep in mind:
1. This fundamental point is confusing to some people. In the State of Florida, if you buy a residence (not necessarily an investment property) while married, the law requires both spouses to be included on the title. There are some ways around this, with various different papers being signed, but normally this is the case.
2. This title or deed is what determines interest or ownership in the property. This is different than what portion of the value of a home is "marital" for divorce purposes. For example, a premarital home that has mortgage and improvements paid largely and for a long time by marital funds, may end up having a portion of its value that has become "marital" for divorce purposes. This would usually be the "increase" in value, so if there is a decrease in value, this may be meaningless.
3. Who actually owes money to the bank relates to who has signed on the loan documents, or mortgage, on the home. It could be that both are on the title and only one is on the loan and it could be that one is on the title and both are on the loan. Usually both are on both. This means that signing a quit claim over to the other spouse with the intention that they pay the mortgage and stay in the home WILL NOT take your name off the mortgage, and the bank will come after you for unpaid payments. This would be true until the house is sold, or the person staying in the home refinances the loan into just their names.
So, basically in these times of home sales being more iffy, if you are on the mortgage but not in the home and not taking responsibility in the divorce case to pay on the mortgage, you will need to take steps to protect your credit and your financial risk. Some things to think about:
* Having a provision in the marital settlement agreement with deadlines, not just for selling or refinancing the marital home, but for when and how it gets listed, with whom and what mechanism you will use for determining the listing price and any adjustments after that. The Court can only enforce details to the extent they are in your agreement. Ask for these same parameters in any Order after a trial on these issues, but understand it is far easier to make sure details get into an agreement.
* Have a provision in your agreement that ensures you get notification if payments are not made timely in the event these statements go to only one party.
* Have a provision in your agreement about what happens if the mortgage is not paid as agreed, at what point the other party can take over possession and responsibility, and what if any ramifications to non- payment there will be beyond losing possession, like losing partial interest or having to pay fees and costs for enforcement.
* Have a provision in your agreement that deals with short sale opportunities if that is a direction you may be forced to head. A short sale happens when a house is so up-side-down (the market value is less than the loan amount) that the parties attempt to negotiate with the bank an agreement to sell the house for less than the loan. Beware that these agreements are talked about around town a lot more often than banks are actually agreeing to them, and that this does not keep the bank necessarily from coming after you for the shortfall. A real estate professional who is very experienced, and / or a real estate lawyer may be needed to safely navigate these waters.
The financial realities are that many fine hard working people are going to lose their dream homes and have to start over in a way they never imagined. The courts can only do so much, but certainly taking steps to detail and control your risks is the smart thing to do.
If you are interested in more information about basic consumer bankruptcy law, this is attorney Jonathan Alper's blog page on the topic: http://www.alperlaw.com/bankruptcy_questions.html.
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