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Bankruptcy, mortgages and foreclosures in a divorce

Among the many concerns spouses in Mississippi may have when getting divorced is how to best handle a home they own together. Perhaps one of the most common things to do in this situation is to sell the house during the divorce. However, not everyone wants to do this and therefore it is important to understand some of the potential long-term implications of keeping a house in a divorce.

As explained by Fox Business, even if one person's name has been removed from the deed to a home that person's name remains associated with the mortgage. This means that if the spouse who retains ownership of the home and, in most cases, the agreed upon responsibility for making mortgage payments fails to keep up on payments, both spouses' credit may be at risk. If one spouse allows a home to go into foreclosure, this might be reported on both people's credit even though the one spouse no longer owned the home legally.

Spouses who are concerned about being in this position may want to consider filing for bankruptcy. According to Bank rate, if the two spouses file for joint Chapter 7 bankruptcy before getting divorced, this might eliminate the mortgage debt even though it may mean the loss of the home. This is one tactic to help avoiding a foreclosure caused by a former spouse's actions or lack thereof.

It is important to note that getting divorced first and then seeking relief from the mortgage via bankruptcy after may not be possible. This is because agreeing to liability for a debt via a divorce might not be able to be changed by a subsequent bankruptcy.

 

 

 

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Pond Law Firm
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Jackson, MS 39216

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