Wednesday, August 24, 2016

How Divorce And Bankruptcy Can Help Eliminate Foreclosure Deficiencies

Getting divorced can leave your finances in significant distress, so much so that you might also face a foreclosure during or after your divorce case is final. Many times marital problems go hand in hand with money problems, but there are things you can do to make the best out of an unpleasant situation. If you are facing a divorce and are also facing potential loss of your home through foreclosure it is critical that you be aware of the possibility of being asked to pay for your home even after the foreclosure. This is because most times when a home sells at foreclosure sale the amount is not enough to satisfy the mortgage debt. When this happens there is a deficiency due and many lenders will take action to collect the deficiency from the homeowners. This can be a double or triple whammy if you are also getting divorced and your ex-spouse was supposed to take care of the mortgage debt in your divorce case.

Unfortunately, not everyone does as they are ordered to do, especially in divorces. It is not uncommon to hear of a child missing out on visitation with one parent due to the actions of the other, or for child support to go unpaid. These things happen even though the family law Judge has ordered support be paid and put a visitation schedule in place. It can also be typical for one spouse to be awarded the marital home in the divorce, but then neglect to make the payments. Because your mortgage lender was not a party to your divorce, if you both signed on the dotted line the lender can look to either spouse for repayment. And if your loan has gone unpaid long enough, you just might find yourself in the middle of a foreclosure case, even if your ex was supposed to take responsibility for the home and the debt that goes with the home. In this case you can do the following things:

         Seek to hold your ex in contempt in the divorce case, which requires you to go back to family court and file a motion for contempt.

         Consider filing bankruptcy to eliminate the debt, at least as far as you are concerned.

If you decide to go back to the family court for help, you might walk away unhappy. Even if the Judge holds your ex-spouse in contempt, if they are unable to pay the debt you will spend a lot of time looking for alternatives. But, with bankruptcy, you are able to list this debt as one of the things you no longer owe, and you can receive a discharge of that debt in the bankruptcy case; including any deficiency the lender might seek after a foreclosure sale takes place. This is because while lenders still have lien rights in property even when bankruptcy is filed, they no longer have the ability to collect the money due on the loan. If you have more questions about how divorce and bankruptcy can help you eliminate a deficiency balance on a foreclosed home, call us today.

For more information about how bankruptcy can help you with a mortgage loan deficiency after divorce, contact us at We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.

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