What happens to a house in Florida divorce when it is underwater (i.e. the mortgage exceeds the value of the home)?

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In Florida, it is quite common these days for a home to be underwater or for the mortgage to exceed the value of the home. Even homes purchased 5 years ago are underwater. In a Florida divorce, the starting point for a Judge is to divide the assets and liabilities equally between the parties. When a home has no equity in it since the mortgage exceeds the value, there really is no asset of value that is part of the divorce; however, there is still the issues surrounding the mortgage, payment of the mortgage, use and possession of the marital home, and other issues that come into play in a Florida divorce.

A Florida divorce Judge can order that the home be listed on the real estate market and sold. A Florida judge also has the ability to award the marital home to one party and to effectuate orders as to the payment of the mortgage and other home related expenses.

Some homes end up in foreclosure while others turn into a short sale. The rulings of the Florida divorce judge are not necessarily binding on the mortgage companies and banks. In other words, if both husband and wife are liability under the note / mortgage, the Florida divorce judge cannot remove either husband or wife as a debtor to the bank or mortgage company.

The Florida divorce judge can have one spouse responsible to the other for these deficiencies but the bank will still has the ability and right to pursue either or both parties (husband and wife) for the debt / mortgage. Another way to rid yourselves of the house would be to try and negotiate a quitclaim deed back to the bank to bypass a foreclosure lawsuit if the bank would waive any further actions against you. A Florida divorce lawyer and / or Florida foreclosure defense lawyer can provide you with legal advice and representation in these situations.

If push comes to shove and you qualify, a Chapter 7 bankruptcy will allow you to surrender the house. Both spouses have to agree or again, the remaining spouse may still be liable.

As you can see, there are a myriad of issues when there is a Florida divorce and a marital home that is underwater. Before signing any documents or forming any agreements, it is advisable to discuss the situation with a Florida divorce lawyer, Florida foreclosure defense lawyer, and / or a Florida bankruptcy lawyer.

Whether you need a divorce, bankruptcy or foreclosure defense attorney in the Jacksonville, Ponte Vedra Beach, St Augustine, Palm Coast or Green Cove Springs area, Wood, Atter & Wolf, P.A. has lawyers in all these areas. They work together as your one attorney.