Examining Your Financial Options Before Divorcing
Some would say that staying in a failed marriage is not worth the pain. When the financial costs of divorce seem too great, couples may decide to file for bankruptcy before or after filing for divorce. A Chapter 7 filing can relieve the pressure of crushing consumer debt, and Chapter 13 may be useful for couples behind on their mortgage payments and facing foreclosure. Such moves should not be taken without professional advice, as both create long-term problems even as they solve more immediate considerations.
Some spouses, drowning financially because of the underwater mortgage, may be able to short sell the home. In a short sale, the lender pockets all the proceeds from the sale of a property even though it sells for less than the mortgage debt, and the homeowners are relieved of the mortgage payment.
Singing the divorce blues in the time of a gray economy makes for very melancholy music, but some people sing the song anyway because they must.
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DATE OF SEPARATION – Depending upon the laws of the state of residence, the Date of Separation – called the DOS – has a profound impact on the eventual division and distribution of property and debt, including credit, pension benefits, and other marital assets. As of the DOS, the separated spouses are now in limbo legally and financially and remain so until the actual Date of Divorce. A great deal of money may be at stake. For example, one spouse may share responsibility for any debts incurred by the other; the value of a retirement plan or other marital asset, such as residential property, may fluctuate, often by thousands of dollars.
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