Divorce & Home Foreclosure Options for in Austin Homeowners

Divorce can be very difficult for all parties involved and trying to determine what to do with your home can be overwhelming. Troubled Homeowner has listed a few options that Austin couples have in a divorce situation.

1. Let the bank foreclose on the property

The foreclosure in most circumstances including divorce will absolve the homeowner from most or all further financial responsibilities but will not reflect well on the home owner's credit report. Consult an attorney regarding your specific divorce situation prior to assuming that there will be minor or no financial repercussions. If there are negative financial repercussions, community property principles apply and if a divorce situation exists, then the parties or court will decide the parties responsibility for the financial obligations. Of course, any Austin divorce rulings define the rights and obligations as between the parties only and are not binding on third party creditors, such as mortgage holders, meaning that banks are free to go after both parties if community property/obligations are involved.

2. Bring the mortgage current and retain the property.

The homeowner will have to pay additional fees/costs to do so but then will continue to own the property. Considering your situation divorce may not lend itself to this option.

3. Sell your property.

Consider a "short sale" which is an effort to sell the property at a reduced price so that the bank will not have to bother with the time and expense of foreclosure. The bank then accepts the buy-out, basically, with less negative effects on the homeowner. It's more complex than that but that's the gist. While going through a divorce, this may be one of the better options. Selling your property can alleviate dealing with the difficulties of one of the main assets in divorce proceedings. I recommend that any real estate professional, such as a Troubled Homeowner consultant and/or divorce attorney guide both the seller and buyer of anyone participating in a short sale situation. Of course, when the real estate market is better than it is at the time of this writing, selling a house and paying off the mortgage in full is easier than it is now. In addition, some lenders will not agree to short sales because they believe it sets a bad precedent that too many other borrowers will attempt to use. Another piece of the short sale puzzle is the possibility the IRS will consider any amounts forgiven as income (consult an attorney regarding the Mortgage Forgiveness Debt Relief Act of 2007 for specifics on that new law and related consequences).

Real estate issues are complex and real property is often the largest asset involved in a divorce. It's a good idea to consult with a competent attorney prior to making decisions about real estate. You may contact Troubled Homeowner and we can provide you with a list of attorneys in Austin