Who Pays the Mortgage When You Get a Divorce?
A mortgage loan can be a tricky subject during a divorce, but with the help of an experienced divorce attorney, you can make sure that everything is handled fairly.
If you have any questions about your particular situation, please contact us.We Would Be Happy to Help!
The decisions made during a divorce settlement can be some of the most difficult ones you will ever make.
But, with the right guidance and support, you can get through it.
In this blog post, we'll discuss who pays the mortgage during a divorce.What You Need to Know
There are many factors to consider when determining who pays the mortgage during a divorce.
Some of these factors include:
- Who is on the deed?
- Who is on the mortgage?
- Who is the mortgage lender?
- What state do the divorcing spouses live in?
- Do you live in North Carolina?
- Do the parties generally agree to terms?
- Who has primary custody of the children?
Each situation is different, so it's important to seek out legal counsel to help determine what is best for your particular case.Divorcing With a Mortgage Can Be Worked Out
There often are different options available.
It's in the best interests of the respective parties to work through different issues together, establishing a fair and equitable divorce settlement.
Under the NC Divorce Laws, issues involving Equitable Distribution are intended to be "equitable" and fair.
Ending a marriage is often an emotional affair.
Sometimes people allow anger and hurt to get in the way of sound financial situations.
We think it makes sense to carefully analyze everything within the Marital Estate and get a snapshot of financial assets and obligations including all mortgage loans and the debt to income ratio.What is a Marital Estate?
In order to determine who pays the mortgage after a divorce, you must first understand what a marital estate is.
A marital estate is all of the property that a married couple acquires during their marriage.
This can include real estate, savings accounts, stocks and investments, and even businesses.
The property acquired during a marriage is generally considered to be joint property, meaning that both spouses have an equal interest in it.
However, there are some exceptions to this rule.
For example, if one spouse owned a house before the marriage, and the other spouse signed a Prenuptial Agreement and did not contribute to the mortgage or the upkeep of the property, it's possible that the house could be considered separate property.
It tends to be a pretty complicated area of law. Of course, that's true for many aspects of divorce and separation, which may include:
- Custody of Children
- Child Support and Visitation
- Post Separation Support or what used to be called "Temporary Alimony"
This is a common question that people have when they are going through a divorce.
The answer to the "Who pays the mortgage loan?" question can vary depending on the situation.
In some cases, the couple may have agreed that one person will keep the house and pay the mortgage.
In other cases, the house may be sold and the proceeds divided between the two parties.
A lot depends on what the parties each want.
It's also prudent to consider the financial impact of legal separation.
Wanting to keep the house is understandable if it is in a good school district, is close to friends and family, and provides stability for your children.
Sometimes taking over the mortgage payments and keeping up with repairs, maintenance, and taxes can serve as an overwhelming financial burden.
If you are going through a divorce and are wondering who will be responsible for the mortgage, we think it is best to speak with an experienced divorce lawyer in Fayetteville.
They can review your situation and advise you on what to expect.Is It Necessary to File a Lawsuit to Get Divorced?
The answer to this question is somewhat complicated.
Filing for Divorce in North Carolina does require a type of lawsuit and eventual entry of a Divorce Decree.
The allegations can be brief, setting forth the minimum requirements necessary under the NC Family Laws that establish the jurisdiction of the Court (the District Court Judge) over the parties.
But, that does NOT mean litigation is required.
When people ask, "Do I have to file a lawsuit to get divorced in North Carolina?" they are most likely really asking, "Do I have to go through the burden of protracted litigation, discovery, and testifying in court?"
Very clearly, litigation is not mandated under the law.
Unfortunately, sometimes litigation is required when the parties cannot agree to terms or when divorcing couples do not proceed in good faith or is unreasonable.
North Carolina does not require "grounds" to file for divorce.
By that divorce lawyers mean, unlike in some other states, fault need not be proved in NC.
Only one party is required. That means that both parties to a marriage do not need to consent to get divorced.
If you want a divorce and your spouse doesn't, they can't keep you from ending the marriage.
To be clear, there are certain requirements under the law, such as a one-year mandatory period of separation before the Court may enter a divorce decree.
One would also be remiss in failing to understand "fault," while not an essential element of divorce itself, may be relevant to issues involving Alimony and Child Custody.
Divorce is complicated.
We think it's in your best interests to rely on the advice of an experienced divorce lawyer in Fayetteville.What Happens if One Person Doesn't Want to Pay the Existing Mortgage?
Even if one person doesn't want to or can't pay the mortgage, both people are likely still on the hook for the debt.
The lender can often come after either person for the full amount of the existing mortgage, no matter who is named on the mortgage.
This is true even if the divorce decree says that one person is responsible for the monthly payments unless they release one party from the debt.
So, if you're getting divorced and you want to keep the house, in the short term it may be important for both people to remain on the mortgage until everything can be worked out in a Separation Agreement.
If you're getting divorced and you're not sure what to do about the mortgage, talk to a lawyer before you sign any legal materials including but not limited to a quitclaim deed.
They can help you understand your best options.What Does an Acceleration Clause Do?
An acceleration clause is a term used in agreements, particularly loan contracts, that gives the lender the right to demand payment of the entire debt if certain conditions occur.
Failing to make the mortgage payments can "trigger" an acceleration clause on a current mortgage, even if it's no longer the primary residence of one or both of the parties.
The most common condition is defaulting on payments, but other conditions can include transferring ownership of the property without the lender's permission or damaging the property.
Failing to pay your home loan can do more than adversely affect your credit history.
If you have an acceleration clause in your mortgage agreement and you divorce your spouse, the lender can demand that the entire mortgage be paid off immediately rather than over a long time.
This is because in many states, when you get divorced, the house is considered marital property and is subject to division between the spouses.
This can create a problem for the spouse who keeps the house because they may not be able to afford the mortgage payments on their own.
If you have an acceleration clause in your home loan mortgage agreement, you should be aware of this risk before you get divorced.When You Get Divorced Who Owns the Home?
The answer to this question is not always clear.
In some cases, the home is sold and the proceeds are divided between the divorcing couple.
However, in other cases, one spouse may be awarded the home as part of the divorce settlement. That may necessitate executing a quitclaim deed at the appropriate time.
If you are awarded the home in your divorce, you will bear sole responsibility for making the current mortgage payments.
If you can't afford the mortgage payment on your own, you may have to sell the home.
Missed payments (and even late payments) tend to adversely affect credit scores.
Before you decide to keep the home, make sure you can afford the mortgage payments and other associated costs.
You don't want to end up in a situation where you can't make the payments and are facing foreclosure.
If you have children, you may want to keep the home so they can have stability and continuity in their lives.
However, you need to be realistic about your ability to make the mortgage payments.
You don't want to put yourself in a financial strain or jeopardize your own credit rating.
If you are awarded the home in your divorce or through a divorce agreement, make sure you understand all of the financial implications before you make a decision.
A good divorce attorney can help can help you work towards the best solution for you and your family.Should I Hire a Lawyer for a Divorce in Fayetteville?
When you get divorced, there are a lot of things that need to be decided.
One of the big decisions is who pays the mortgage on the marital home.
In some cases, both parties may want to keep the house and remaining spouse will buy out the other person's share.
In other cases, one party may want to keep the house and the other party will agree to give up their interest in the house in exchange for something else.
If you and your ex can't come to an agreement about who pays the mortgage, you may need to hire a lawyer or go to court.
Your house is likely one of the largest assets of your Marital Estate.What is a Separation Agreement?
Working through the terms and conditions of a Separation Agreement, which necessarily includes resolving issues involving Equitable Distribution, Child Custody, and Support, deserves the attention of a Family Law Attorney in Cumberland County with substantial experience handling such matters.
Separation Agreements are intended to avoid litigation. They are a type of Settlement Agreement.
If the parties cannot come to an agreement, a District Court Judge will make the decision of what to do.
There are not jury trials in family law cases.
A District Court Judge decides disputes involving Equitable Distribution, Support, Visitation, Custody, and Alimony
A judge will look at a number of factors, including each person's income, whether there are minor children in the home, and whether one person is going to stay in the home after the divorce.
The judge will also look at who owns the house - if it's owned by both parties and there is a joint mortgage, the judge may order that the marital home be sold and the proceeds divided between the two of you.
If you're going through a divorce, it's important to talk to a divorce attorney about your options and what's likely to happen with your mortgage.
You can also talk to your mortgage lender to see if they have any programs that can help you during this difficult time.Should I Hire an Accountant? Do I Need a Financial Adviser?
These are common questions people ask themselves when they are going through a divorce. The answer to these questions is not always clear cut and it really depends on each individual case.
When it comes to money and assets, the first thing you need to do is figure out what is considered joint property and what is separate property.What is Separate Property?
Big picture, understanding there are always exceptions, joint property is generally thought of as assets acquired during the marriage, including a house, car, or furniture.
Separate property includes things of value (assets) owned prior to the marriage, inherited during the marriage, or given as a gift that did not become part of the Marital Estate.
It's a complicated area of law and can be a basis for disputes between the parties of a marriage.
Once you have determined what is joint and separate property, you need to figure out who will is responsible for paying the mortgage on the joint property.
If you are unable to come to an agreement, then you may have to go to court and let a judge decide who pays the mortgage.Can a Divorce Affect My Credit Score?
The short answer is, yes, a divorce can affect your credit score.
During the divorce process, you and your spouse may decide to sell joint property, such as your house or car.
You may also decide to close joint accounts, such as credit cards or loans.
If you have any outstanding balances on these accounts, your credit score could be negatively affected.
It's important to keep in mind that a divorce itself will not directly affect your credit score.
However, the financial decisions made during the divorce process can have an indirect impact on your credit score.
If you are going through a divorce and have questions about how it may affect your credit score, it's important to speak with a financial advisor or accountant.
They will be able to help you understand the potential impact of the decisions you make during the divorce process.What are Some Common Mistakes People Make During a Divorce?
One of the most common mistakes people make during a divorce is failing to properly value assets. This can have a major impact on who pays the mortgage after the divorce.
For example, if one spouse owns a home that is worth $300,000 and the other spouse owns a business that is worth $200,000, it could be determined as "equitable" for each spouse to receive $250,000 from the sale of the family home.
However, if the home is valued at $400,000 and the business is only worth $100,000, then the spouse who owns the home may be entitled to keep the entire proceeds from the sale of the property.
This can create a major financial burden for the spouse who owns the business, as they may need to find a new place to live and may have difficulty making ends meet.
Another common mistake people make during a divorce is failing to properly account for debts.
This can also have a major impact on who pays the mortgage after the divorce.
For example, if one spouse has $50,000 in credit card debt and the other spouse has $30,000 in student loan debt, it may be determined that both spouses are jointly responsible for the collective debt.
Put simply, working through the numbers can be complicated.
That's one reason we recommend a full review of your financial condition before moving forward or signing any legal documents.
We recommend you seek the advice of an experienced Divorce Lawyer in Cumberland County NC.Will I Be Able to Refinance the House?
If you are hoping to keep the family home after a divorce, you may need to refinance the mortgage.
This can be a difficult process, especially if your ex-spouse is listed on the mortgage.
You will need to show proof of income and employment, as well as good credit.
If you have joint debt, such as credit cards, you will need to show that you can pay the debt on your own.
You may also need to get a new appraisal of the home to show its current value.
If you are able to refinance the mortgage, the goal is to make you the sole owner of the home and responsible for making all future payments.
This can give you the peace of mind and security of knowing that you will not have to worry about your ex-spouse's financial situation affecting your own.
Of course, this is not always possible, and you may need to sell the home and split the proceeds with your ex-spouse.
You may also decide to keep the home and pay your ex-spouse their share of the equity.
This is something that you will need to discuss with your attorney and come to an agreement on.What Happens if I Don't Want to Keep the House?
If you don't want to keep the house, you may be able to sell it and split the proceeds with your ex.
If there is still a mortgage on the property, you'll need to figure out who will pay it off.
This can be done by selling the house, refinancing the mortgage in one spouse's name, or having one spouse buy out the other's interest.
If you can't come to an agreement, the court will make a decision based on what is best for both parties and any children involved.
It's important to remember that just because one spouse is awarded the house in the divorce, this doesn't mean that they are responsible for the entire mortgage.
Both parties are often still responsible for paying their share of the mortgage, even if one spouse moves out of the house.
If you're going through a divorce and have questions about who pays the mortgage, it's important to speak to an experienced family law attorney.
They can help you understand your rights and options under the law.Divorce Lawyers in Fayetteville, North Carolina
At the Beaver Courie law firm, we understand that divorce is a difficult and emotional process.
We also understand the importance of making sure that your rights are protected throughout the entire process.
If you have questions about who pays the mortgage in a divorce, our experienced family law attorneys can help.
We will sit down with you and discuss your specific situation and help you figure out what the best options are for you and your family.
Contact us today to schedule a consultation. We look forward to speaking with you.