Gabriel Cheong, a lawyer in Massachusetts, has a good blog post about the options for divorcing couples when their house is underwater (or in other words, worth less than the amount owed on the mortgage).
He describes (in greater detail than here) 6 options:
1) Live there together until one can afford to move out or refinance.
2) Continue to own the house with one person living there.
3) Refinance.
4) Short sale.
5) Foreclosure.
6) Work with your lender to modify your mortgage.
Another option is for both parties to file for bankruptcy. This would in all likelihood be very messy but if saving your house is a priority, it might be possible under certain situations. You should consult with a bankruptcy lawyer to see if this might be helpful for you.
The other idea that comes to mind, of couse, is to dismiss your divorce or not file for divorce until you can get your home situation straightened out.
Clearly, none of these are ideal choices.
Check out Gabriel’s blog at Massachusetts Divorce and Wills Lawyer for more helpful ideas.
