The home mortgage crisis in the United States has spawned problems in the mortgage, real estate and banking industries, and many consumers are now facing mortgage payment increases in the coming months that could cause the number of home foreclosures to climb even higher. And all of those financial woes may be spawning another problem as well -- an increase in divorces, experts say.
"A recent poll commissioned by divorce360.com ranked financial issues as the number two reason that Americans divorce, with abuse one of the main reasons for divorce in this country today."
(The above is from an article by: Don Moore ... "Real Estate: Home Mortgage Crisis May Boost Divorces in U.S., Experts Say")
When a marriage ends, it's a difficult time for both parties involved ... and for any children the couple may share. Both emotionally and financially, divorce takes its toll. This toll can be further exacerbated if one of the primary reasons for the divorce is foreclosure on a home or ongoing financial hardships.
With the present financial crisis being felt by so many, it is then no real surprise that across America many couples are reaching the decision to dissolve their marriage.
Because of ongoing strains felt financially and emotionally, it can be an extremely hard time to make important financial decisions for the future during the divorce process. But, most times this is exactly when these decisions must be made. The settlement of homeownership and dissolution of other shared finan
cial accounts and concerns must be determined during this upheaval.
As cold as it may sound, divorcing couples must always remember that marriage ... and its dissolution ... remains a business deal. Steps must be taken to ensure that a fair and equitable ending is reached for both parties involved. Each should be able to move into their future satisfied and prepared monetarily as best as the situation allows.
It may seem nearly impossible at this time, but divorcing couples must take control of their lives again ... starting at this very point. To accomplish this, they each should seek advisors that will assist them in making wise choices. They need to create a "team" of advisors for themselves that are trustworthy, knowledgeable, and have the proven expertise to offer them sound advice during this transitional time in their lives.
Some of the issues that should be discussed and resolved at this time may be:
- Do you sell the property ... or will one party remain in the home?
- If financial strains are an issue ... Do you file foreclosure or short-sale the home?
- If retaining the marital property, a quit-claim deed must be prepared by legal counsel transferring the title and rights to the property to the remaining spouse.
- If there is outstanding debt on the marital property, the remaining or residing party must refinance to his/her name only, allowing the exiting spouse to be relinquished of the mortgage debt.
- Any joint debt or assets to be split must be evidenced in the Divorce Decree and the creditors advised in writing of the removal of one of the parties to effect the Credit Report properly.
- Consultations with attorneys and professional mortgage loan advisors should be completed before taking any actions, such as listing the marital property or a party buying another property.
- Establishing and repairing credit issues is important. Make sure you cancel all joint accounts held with an ex-spouse.
It is important to stress here ...
Do not leave any legal issues unresolved after your divorce. Your credit scores can be effected by your ex-spouse moving forward into the future should all legal issues not be taken care of properly. Old problems and your ex-spouses financial stresses can become yours once again, if not resolved.
Once your divorce is accomplished, it is wise to check your credit report again. That way you make sure all previous issues are addressed and in order.
Divorce and financial hardships are painful. Taking the right steps during and after your divorce can restore your life and good credit. If facing this situation currently, take measures to protect and heal yourself both emotionally and financially. Partnering with strong, knowledgeable advisors is the first crucial step you should take towards re-establishing the peace of mind and healthy finances you deserve and so greatly need moving into your future.
Gene Mundt, Sr. Vice President
Personal NMLS #216987
The Federal Savings Bank
1823 Centre Point Circle, Naperville, IL 60563
Skype! 630-219-1316
I have actually seen couples stay together because they can not afford to be apart too... .
The bright side of the big D, it keeps the Real Estate world somewhat active!
I have seen couples stay together because it costs too much to divorce. Wow-Only in America
Robert: Good to hear from you again! And yes, sadly that happens too. It is true that it feeds the real estate business. Most unfortunately, but true. Thanks for writing ...
Gene
Harry: I can see this being the case, especially if financial problems were the main issue leading to the divorce especially. It would be an extremely stressful and sad household. Appreciate the comment ...
Gene
Good article Robert
Gene
Foreclosure/financial problems close on the heels of abuse as the #2 reason for divorce. Sad times and definitely an unforseen byproduct of the recession.
Good article. I've actually seen several couples who are going through foreclosure that are also getting divorced. Seems like the two go together.
Financial tension leads to personal tension which leads to.....well.... a lot of problems
Excellent advice, Gene. Not a popular subject, but something that needs to be addressed. I am in the process of representing my buyers in a short sale that is the result of a divorce. It is a beautiful house, so very sad.
Gene - I think a lot of it also stems from the lack of communication. I have know couples who have no idea how much their spouse is spending on things. Or, how about the couples that are married but keep separate bank accounts they keep their own money in. Being married isn't about a partnership as much as it was once upon a time in a land far, far away.
Bill: Thank you!
Margaret: Sad times, indeed ... and one that doesn't get as much attention as maybe it should. If more outlets to address and discuss these problems, maybe fewer divorces?
Kathy: Unfortunately I believe you are right. One seems to only make the other worse ...
Keith: If stressed and unable to communicate about one, the other problem seems to naturally follow. It makes for very tense transactions afterwards.
Jane: When you think about all the dreams and hopes that were once a part of that home in happier times ... yes, extremely sad.
Troy: I think you are right. There's obviously been a real breakdown in communication somewhere. When that communication ceases, it seems to go downhill quickly.
Thanks all for writing!
Gene
Gene - Last year, I had a client who was getting divorced who was still living in the house with his wife and kids. It was so odd, yet very amicable. I helped him buy a condo that was just blocks from the wife and kids. Good post and very sound advice.
Donne: I guess, better that than WWIII breaking out. Civil and close by so they both can still remain involved parents. Sounds very intelligent and mature. Too bad it doesn't happen all the time. Thanks for the kind words ...
Gene
Gene: It can be very difficult for a spouse to get another home loan when he/she moves out because if that party is still on the mortgage and the ex cannot qualify to refi, there are too many obstacles with respect to the debt ratios. I think this is also another reason why some just stay in the same house together. Great advice!