The recession has been a difficult time for a large majority of Americans - especially those facing unemployment, credit card and mortgage debt. But for couples going through divorce proceedings, the economic downturn poses a new set of financial burdens such as additional legal fees and expenses. Couples both going through a divorce and having financial troubles have options to avoid foreclosure and prevent their credit score from taking a nosedive.
According to North Carolina divorce attorneys Gailor, Wallis and Hunt, divorcing couples may want to reconsider selling their home until the market recovers if they both have the finances to continue making payments. In this situation, one party would remain in the primary residence while the other would rent another residence. This may allow the couple to sell the home at a later date when the market recovers and home values improve, the law firm suggests.
Couples may also consider securing separate apartments and renting out their home. This option should only be exercised if the debt and expenses associated with the house will be covered under the rent, the attorneys caution.
Lastly, couples that want to sever all financial ties and resolve any debt may want to consider a short sale. By negotiating with the lender and agreeing to pay the difference on the amount owed and the sale price of the home, spouses may relieve themselves of further debt and prevent foreclosure. However, individuals may see their credit scores decline with this option.
According to a recent report from RealtyTrac, more than 3 million residential foreclosures filings and 1 million bank repossessions are expected by the end of the year. Distressed homeowners who are also getting divorced should speak with their attorneys about reaching financial agreements that will not drag down both of their credit scores and prevent them from securing financing for a new home or other lines of credit.
In addition to resolving mortgage issues, couples should also make sure that all joint credit cards are closed properly to avoid negative marks on both party's credit reports. Any requests to close lines of credit should be done in writing and followed up on by phone to make sure the accounts are truly closed.