Dear Boston, Massachusetts:
I assume that the outstanding mortgage on the house is in excess of what it could be sold for.
If it is not too late, you may have time to arrange for a short sale. Even if foreclosure proceedings have started, this might be possible.
You will need to find a Realtor that is familiar with the process. Depending on the amount you are short, the lender may agree not to collect on the difference. However, keep in mind that if the lender agrees not to collect, you will be taxed on the difference. For example, if the house has a $200,000 mortgage and it is sold for $150,000, you would receive a 1099 at the end of the year for $50,000.
If the lender will not agree to forbear collecting on the difference, or it is too late to stop the foreclosure process, the lender may get a deficiency judgment against you and the other co-owner for the difference in the price. In the above example, if the house had a $200,000 mortgage and sold in foreclosure for $150,000, the lender could try to collect the $50,000 from you and the other owner.
You may be able to borrow enough to cover the difference and and pay it back over time. Therefore, you would not need to worry about your assets being attached.
If you can't, yes, you may need to worry about some of your assets eventually. However, attaching assets will take a judgment and a court order, so you should have some time. In lieu of that happening, I suggest working out a payment plan.
There are other options, such as a pre-foreclosure sale. You will need the cooperation of the lender and an experienced Realtor. There is also a deed-in-lieu of foreclosure, but the lender needs to work with you on that.
Rather than talking with just a tax preparer, I recommend that you talk to a CPA who has experience in personal tax issues and can advise you and your husband on the best course of action, tax wise.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).