• 11
  • October
    2011

In a divorce - in Atlanta or anywhere else - the property settlement is important. Each party wants to be able to start a new life with as much clarity as possible about finances.

But dividing up the house in a marital settlement is a lot more challenging than it used to be. The Great Recession and the accompanying housing slump have seen to that.

A house is still often the largest asset that a divorcing couple has. In today's economy, however, it may also be their largest liability. About 1 in 5 U.S. households suffers from "negative equity" in their home. In other words, they are underwater on their mortgage.

And with the real estate market still languishing, that number seems likely to keep rising.

This reality cannot help but affect the property division in a divorce between a husband and wife who owned a home together. For one thing, even if the couple is prepared to take a loss, it is far more difficult to sell a home than it used to be. It raises the prospect of a short sale, which would require an agreement with the lender.

What if one spouse moves out of the house and wants to buy another one? Buying another house may not be possible until the spouse who remained in the home refinances the joint mortgage. And refinancing may not be readily forthcoming because of stricter, post-Recession underwriting standards.

In short, your house is not necessarily the bulwark against financial turmoil that you probably thought it would be when you bought. That's why it's so important to discuss all aspects of property division with your divorce lawyer.

Source: "Divorce: Who Wants the House?" Wall Street Journal, 10-1-11