Facing Property Foreclosure in a Divorce
Facing a divorce and a foreclosure at the same time will test you but the truth of the matter is that many couples face such circumstances. An Arizona divorce, unless it’s an amicable one, can have serious financial consequences. You may think that the divorce proceedings themselves finalize the court process but this may not be the case. If a foreclosure lawsuit occurs, the couple will have to go back to court in order to address the issue. Let’s find out about facing property foreclosure in a divorce in Arizona.
Who Is Responsible for the Home Mortgage?
To address all aspects of a foreclosure in the context of a divorce, it’s important to examine the legal specifics. Who is responsible for the mortgage of the property is the first and probably the most important question.
Very often, married people will take title to the property jointly. Alternatively, one of the spouses will take the mortgage and sign the promissory note.
A promissory note is in essence a legal document that establishes the respective person’s obligation to pay. If a husband and a wife both sign the promissory note, they will be jointly responsible for all of the payments. One individual signing the promissory note will free the other one from responsibility.
In the case of a divorce, the court will have to decide who is going to keep the marital home and who will have to make the mortgage payments. If both individuals neglect this duty, the foreclosure process could be initiated.
Facing a Property Foreclosure in a Divorce
Even if you are going through a divorce, a foreclosure will continue in most circumstances. The only exception is the home’s mortgage being brought current along with the reasonable foreclosure costs.
If you are facing such a scenario, you may decide on a couple of approaches to handle the financial problem.
The first possibility is letting the bank foreclose the property. When this happens, a homeowner will typically be absolved of financial responsibility. The court will decide which party is responsible for the financial obligation in the case of community property. If you are the party, you will next have to consult an attorney to determine whether letting the bank foreclose the property is in your best interest. In most situations, such a decision is not going to have an impact on your credit.
To retain the property, you may want to bring the mortgage current. This scenario is going to be associated to certain fees, which is why it may be unsuitable for individuals facing serious financial distress.
A short sale is another very popular scenario for those going through a divorce and a foreclosure at the same time. In the case of a short sale, you will be selling at a reduced price but you will be getting the amount almost immediately. In this case, the bank will be free from having to trigger the foreclosure procedure, which is why it will almost certainly agree to the short sale.
What If Your Ex Wants to Keep the House?
A general rule of thumb is that if your former spouse wants to keep the house, they will also have to assume the responsibility for the mortgage. As a result, you’ll be freed from having to deal with the bank.
Depending on your finances and the specific circumstances, you may want to consider whether letting your ex have the property is going to be the easiest way out. Even if you feel emotional attachment to the house, you may have to let go to deal with the property foreclosure in a divorce.
If you’re not happy with this possibility, you may want to ask the lender to modify the terms of the mortgage. A bank could potentially agree to such a scenario, which will enable you to keep the house.