More and more people have substantial credit card debts, home equity lines, and/or second mortgages on a home. I see many divorces where the assets are less than the liabilities. This is a situation where there may have to be some creative financing. There may be the necessity for exploring bankruptcy. It may be a situation where some of the credit card companies will negotiate a reduction in debts if there is money to pay them off, assuming someone’s credit has already been hurt by the economy. These are all situations that are happening more and more frequently in our current economic mess.

Last, but not least, bear in mind that as you go through a divorce, creativity is more and more important now than it may have been three or four years ago when people had positive equities in their homes, substantial value in their IRAs, and 401Ks. They also had a belief in a secure job and economic future. Things are different now, and every case must be handled very delicately because of the horrible recession that we are going through, which quite frankly, is worse than any time since the Great Depression over 70 years ago.

Here at Gornbein Smith Peskin-Shepherd PLLC, we would be happy to answer any questions on cases regarding Divorce Law.

More and more cases involve marital homes that have negative equity. If your home has little or no equity, there are several decisions that have to be made in the divorce. First of all, do you keep the home? If there is the cash flow to do so, it may be wise to keep the home until the economy turns around. If you or your spouse cannot afford to keep the home, and are forced to sell it, try to work out a walk-away with the bank. This will depend on the economic circumstances of your divorce. Another possibility is a short sale. In a short sale, you may have to come up with cash or the bank may allow you to walk away. If you have a second mortgage, this will complicate the situation, and while you may be able to walk away from the first mortgage, the second mortgage or home equity line will put you into a situation where unless they are willing to negotiate on that as well, you may be stuck. Other possible options in these situations may be bankruptcy. This is where it is important to have sound legal advice for any marital property division.