Bankruptcy

I Am Being Divorced And Must Move

Divorces are emotionally and financially devastating. If both husband and wife worked their combined income was used to qualify for the home mortgage. Usually, couples will try and buy all the house they can afford. Everyone wants a nice comfortable home. However, small financial problems can escalate into stress and a missed or late mortgage payment. Late payments and missed payments are serious credit problems.

Financial pressures from a substantial mortgage payment and the lack of spendable income causes many couples to argue. These arguments may uncover deep rooted beliefs or inflexible spending or saving habits. When you mix in any other issues oftentimes the conflict will escalate into a separation. Nowadays, separation and divorce are very common. Currently, at least 50 per cent of married couples will divorce.

The divorce will remove one working persons’ income from the household’s income. This loss of income will make an unbearable burden for the party wishing to stay in the home. Add to this a few missed payments and the outlook is dire indeed. Refinancing is not an option if payments are missed. One persons income will probably not be sufficient to qualify for a new loan. Poor credit will either make the interest rate higher and thus more expensive or disqualify the borrower completely.

The next step, if the couple is not in denial is to try and sell the house. Care must be exercised to select the best method of sale. Do you sell through a Realtor, FSBO, Online ads, a family member, or maybe an auction? Time is quickly removing options. Soon the lender will send a letter demanding payment for all back payments. Failure to remedy this default will soon result in a letter from the lenders attorney calling the note due and payable or they will foreclose.

Our unhappy couple may sell the property if the market is good and they have the skills to complete the transaction. Oftentimes, the market or the condition of the property is unfavorable to a normal sale. A distressed property and a distressed homeowner are two sure signs of trouble. If the property has any equity a sale to an investor might be viable. Typically, the house’s value has plummeted due to a poor market and is worth less than the loan balance plus the cost to sell it.

What to do now? Do we just pack up and walk away. Many do. Do we file bankruptcy to stop the foreclosure? Lawyers advertise this option vigorously. Many homeowners file for Chapter 13 bankruptcy. This will stop a foreclosure. However, all that has occured is a temporary halt of any collection activities. In a period of about 60 days your case will come before the Bankruptcy trustee. The trustee is there to approve your reorganization plan.

The scenario will go something like this. You must begin making your regular house payment. You must agree to a repayment schedule for any past due payments and fees. You must pay a fee to the trustee to oversee your plan. What has just happened? Now you are going to be making your house payment which was difficult enough. In addition to that, you will now be required to make an additional payment. This extra payment will likely be about half of your house payment. Now you are ready to make one and a half house payments. Is’nt this fun? You paid a fee to your attorney, you paid filing fees to the court, and you are paying a lot more for your house payment.

You may not be suprised to hear that most filers are unable to follow their plan. Your bankruptcy will be disallowed or failed out. Immediately, all your creditors will resume collection activities in earnest. Time is very short and few options remain to save your house. Over 80 per cent of these cases will result in foreclosure and eviction of the homeowner.

Finding a new place to live will be difficult with a bankruptcy filing and late payments on your credit report. Landlords want good credit tenants in their property. Let us hope you did not lose your job during this process. Finding a good job with bad credit is nearly impossible, too. Any credit available now will be very expensive for years to come.

We were speaking of the divorce. The divorce attorneys will demand their fees and court costs before proceeding. Divorce is serious and expensive and will take many years to overcome it.

Leslie J West is a real estate investor and author to many articles and websites. More information is available at Real estate Investing and Real Estate Flipping. His article directory Articleguild.com has thousands of free articles to read and enjoy. Publishers and authors are welcomed to visit for free articles for publication.