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One of the most challenging aspects of divorce is selling the family home, a process that often becomes necessary. Whether required by the court or agreed upon by both spouses, the decision to sell the family home can be emotionally and financially taxing. For many, the home holds cherished memories, making it difficult to part with. For others, financial considerations take precedence, especially when the home’s value or current market conditions complicate achieving a profitable sale. Regardless of your circumstances, selling the family home in divorce requires careful planning, thoughtful decision-making, and strategic steps to navigate the process effectively during this difficult time.
A short sale is an option that some families pursue to deal with the reality of a house not generating any profit upon its sale. People commonly refer to this situation as being “underwater” on the home when the mortgage debt outweighs the home’s market value. When there is no equity in the home, you will need to contact the bank or company that holds your mortgage and work with them on selling the house.
The arrangement works like this: the property (your home) sells for less than the remaining mortgage balance. You would not be able to do this without the surrender of the mortgage company. In the typical sale of a home, you would go out and seek fair market value based on multiple offers and an appraisal of how the home’s weight compares to other similar homes in your area. A closing document will disclose to the mortgage company that you are not pocketing some of the profit made on the sale of the house and are applying every penny that you can to the mortgage.
If You Are Interested in a Short Sale, Get Ready to Be Patient
Short sales typically require a long time to gain approval and complete the transaction. Most mortgage companies provide information upfront, allowing you to understand the necessary steps and ensure you meet all requirements before proceeding with the sale.
A short sale may not be the cure for all of your money woes, however. First of all, if yours is a family with a more than modest income, you may not even qualify for a short sale. You must demonstrate an inability to pay the loan before your mortgage company will likely consider approving a quick sale. If you are thinking of moving towards a short deal, you should do a pretty heavy-duty analysis of your finances before taking the plunge.
Another consideration you ought to make when pushing for a short sale is how long you and your family need to remain there for shelter. Divorce often brings financial issues to bear for families like yours. The great investor Warren Buffet is fond of saying that it is obvious who was skinny dipping when the tide goes out. Meaning: when times are tough, it is then that we can see who was not prepared. If divorce is already stretching your financially strapped family thinner than usual, it may not make sense to make a short sale if you don’t have the resources to find shelter elsewhere.
Short Sales Are Preferable to Foreclosure
A short sale only makes sense if foreclosure is a real threat to your family if you don’t pursue or get approval from your mortgage lender. The primary reason to pursue a short sale is to secure a release from your mortgage lender, ensuring you have no future liability once the sale is complete. To protect yourself, always have your attorney review the sale contract to confirm that your liability to the lender ends once the short sale is complete.
A person who works professionally in the world of real estate or an attorney should be by your side if you decide to pursue a short sale. It is preferable to have someone who knows how to work a temporary deal in Texas and knows our state’s foreclosure laws.
When Should You File Bankruptcy
Timing is everything. Undoubtedly you have heard that expression used before. If you face divorce, then timing is even more of the essence. A joint bankruptcy can frequently reduce the cost of a divorce case because you will be paying one filing fee instead of two and can share an attorney. Once you resolve issues related to unsecured debt, such as credit cards, you can then focus on addressing child support and custody matters.
A problem that you and your spouse may run into if you consider filing a joint bankruptcy suit is that many bankruptcy attorneys will not take your case. This is because when spouses are going through a conflict like a divorce, it is possible you will not be able to agree with your spouse on any issues to complete a Chapter 7 bankruptcy. A Chapter 13 bankruptcy takes far longer than a Chapter 7 (often four or five years) and is not a viable choice for you and your spouse since your proceedings need to wrap up quickly in order so that your divorce can wrap up quickly.
Undoubtedly, bankruptcy will delay the completion of your divorce; there is no way of getting around this fact. In cases where people file bankruptcy alongside a divorce, they typically do so to stop a home foreclosure or prevent the collection of overwhelming debt. I have heard of situations where a spouse will file for bankruptcy to gain a strategic planning advantage in the divorce, but this is not an option for most people.
Consider Filing for Bankruptcy After Your Divorce Has Already Been Completed
If you want the best chance to get some closure on your debts, your best bet may be to forego filing for bankruptcy during your divorce and instead file for bankruptcy once your divorce has concluded. Some family law attorneys argue that having debt on the negotiating table keeps both sides more honest and realistic in their positions. This is an argument dependent on your case’s specific facts.
If You Are in a Divorce and Your Spouse Has Filed for Bankruptcy, Read Our Blog Tomorrow to Find Out What Will Happen Now
First, your spouse files for divorce from you. Now that your case is underway, you are hit over the head with an update that they have filed for bankruptcy. You may be wondering what will happen next? To find out what will likely happen, you should return to our blog tomorrow to learn with us. We are excited to share some essential tips and advice with you.
In conclusion, selling the family home in divorce is one of the most emotionally and financially complex decisions couples face. The family home often holds significant sentimental value, as well as being a major asset, making the sale challenging for both parties. Whether the decision to sell is driven by court orders, mutual agreement, or financial necessity, it’s crucial to approach the process with careful planning and professional guidance. Understanding the legal and financial implications of selling the family home in divorce ensures that both parties can move forward with clarity, stability, and a fair resolution.
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- What Happens to the Marital Home in Divorce?
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- Five Ways To Give Your House To Your Kids
- Who Gets the House in a Texas Divorce?
- Alex Jones’ Bankruptcy and Sandy Hook Defamation Case
- How a Bankruptcy Lawyer in Fort Worth Can Assist During Your Divorce
- The Role of a Bankruptcy Attorney During Divorce Proceedings
- Where Bankruptcy and Family Law Collide in Texas
- First Comes Divorce and Then Comes Bankruptcy: What to Expect When One Follows the Other?
Questions about divorce or family law? Contact the Law Office of Bryan Fagan today
The Law Office of Bryan Fagan, PLLC, represents clients across southeast Texas- from Baytown to Katy and all points in between. We must put your interests ahead of our own, which is a responsibility that we take very seriously. If you find yourself in need of some advice regarding a family law case, please do not hesitate to contact our office. We offer free-of-charge consultations to those people in our community who need some perspective and conversation regarding their life. We can meet with you six days a week and look forward to the opportunity to do so.
