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LawTalk
LawTalk, Attorney
Category: Legal
Satisfied Customers: 27253
Experience:  I am a practicing attorney with more than 30 years of experience in the legal field.
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Hello! Needed to ask another question pertaining to a divorce

Customer Question

Hello!
Needed to ask another question pertaining to a divorce settlement. If I lost my job, and cant make house payments, both of our names our on the account. My ex spouse will not sign over a quit claim deed, yet refuses to pay. Will I need to default on the loan? Additionally, wouldn't her credit be effectd just as mine is for non payment? I am contacting the bank tomorrow to let them know that I will need to short sale or default on my loan. What are negative effects for me?

Can we still get divorced if the property is still in jeporady of being sold?

Another question, If my daughter from a previous marriage is now 17 and graduated from HS, do I still owe 1300 per month of child support until her 18th B-day? She is going to a community college and lives with her mother.

Thank you
Submitted: 2 years ago.
Category: Legal
Expert:  LawTalk replied 2 years ago.
Good morning,

I'm sorry to hear of your dilemma.

Yes, the credit scores of all parties on the loan will be negatively effected---regardless of who may own the property after the divorce.

There really is not a whole lot of benefit to a short sale UNLESS, you can get an agreement IN WRITING from the lender that they will not seek a deficiency judgment from you after the short sale, and that they will forgive the debt.

Other than that, the short sale generally is very time consuming---lenders often will not agree to the off, even after you bring what you believe is a good offer---if there is more than one mortgage--all lenders must agree on the short sale---you must generally remain current on your mortgage during this period---your credit score will suffer almost as bad a hit for the short sale as it would for a foreclosure.

Most people will instead opt for what is known as a strategic foreclosure. They cease making payments on the mortgage and taxes---and bank the money they save during the 6 to 12 month average time it takes the lender to decide to begin foreclosure and when the property is sold at the foreclosure auction for use in relocating.

After the foreclosure is completed, the lender will auction the house. The lender can do one of a couple of things then.

The lender can seek a court judgment against you for the difference between the loan amount and the amount of sale at auction (deficiency). With the judgment, they can attempt to collect money from you; they can garnish your wages or levy on your bank account.

The lender, however, often will not bother to do this though because the collection rate on deficiency judgments are usually not very good --in fact statistically, the collection rates are dismal.

The lender may instead choose, and often does choose, to write the debt off for tax purposes. If they do that, they will send you a 1099 tax form and the loss the lender took (the difference between the loan amount and the amount of sale at auction), will be attributed to you as income and the IRS will expect you to pay income taxes on that amount. HOWEVER, if you can show that you were insolvent at the time of the foreclosure---that your debts, including the house, exceeded your assets, then the IRS will not force you to pay any taxes on the amount that the lender writes off.

If you were not fully insolvent at the time of the foreclosure---as an example you had $10,000 more in assets than in debts, then while the lender may 1099 you for $100,000, you would only have to pay taxes on the amount that you were above the insolvent level----you would pay income taxes on just $10,000.00.

Under CA law, child support ends at age 18, or at age 19 if the student is not completed with high school. In this case, you will pay support until your daughter's 18th birthday.

I wish you the best in 2011.

Because I help people here, like you, for a living---this is not a hobby for me, and I sincerely XXXXX XXXXX abiding by the honor system as regards XXXXX XXXXX I wish you and your family the best in your respective futures.


Would you be so kind as to Accept my Answer so that I may be compensated for assisting you? Bonuses for greatly informative and helpful answers are very much appreciated. Thanks Again,

Doug

LawTalk, Attorney
Category: Legal
Satisfied Customers: 27253
Experience: I am a practicing attorney with more than 30 years of experience in the legal field.
LawTalk and 14 other Legal Specialists are ready to help you
Customer: replied 2 years ago.
Thank you, Doug. I will accept your answer, however, 2 more questions if I may. So, may I still have the divorce without the property being settled? How would I go about this? We don't want a court hearing and only have 1 month before the 6 month period is completed.

I also think she is using an attorney. She has taken everything and left me with the home that is clearly under water. Purchased @ 689,000. now valued comps @ 467K. Loan amounts put us under by 70K
She is demanding monies out of my 401K that is only 10K more than hers and also demanding monies from my daughters 520 plan. She never adopted her and in fact did not allow her to live or support her. Does she have a right to that money? She claims she does because it should have gone to the household.

Thank you- JL
Expert:  LawTalk replied 2 years ago.
Good morning,

I count not two questions, but three---and quite complex questions at that---asking how to bifurcate a divorce, and getting into money issues dealing with a fund set up for your daughter presumably with marital funds.

There are entirely new questions, not simply follow up questions seeking clarification of the original answer.

Please know that the Terms of Service of JustAnswer specify that each customer ask one question in each question thread. I would respectfully XXX XXXX you open a new question thread if you have a new question to ask.

Thank you.

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