The Impact of Divorce on Your Mortgage Liability in Hackensack, NJ

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Facing a divorce near Hackensack, New Jersey? If so, then you probably have a lot of questions about the legal aspects of your divorce and which steps to take next. Things can get especially complicated when there is a shared mortgage involved, especially as it relates to who will stay in the home and who will be responsible for mortgage payments moving forward.

Ultimately, your best bet is to find a Hackensack divorce lawyer available to represent you moving forward. This remains true regardless of how amicable or tumultuous the separation is. By working with an experienced divorce attorney, you can get the answers, advice, and representation you need to get through this difficult time without giving up your rights or being taken advantage of.

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Understanding New Jersey Divorce Laws

When it comes to understanding the legal impact of divorce on mortgage liability in Hackensack, NJ, perhaps the most important thing to know is that New Jersey is an “equitable distribution” state. This means that the courts are under no obligation to split the marital property in a 50/50 manner; instead, they are required to help distribute marital property in a way that is considered fair.

In an equitable distribution state, then, there are many factors that come into play when it comes to how property (including a marital home) is divided in the event of a divorce. This includes the income that each spouse brought into the marriage, the needs of any children involved, the current economic status of each party, and even the length of the marriage.

“Equitable Distribution” of a Marital Home

So, what exactly does equitable distribution mean when it comes to a marital home? After all, you can’t exactly split a home in two. Ideally, you and your soon-to-be-ex-spouse will be able to come to an agreement on what to do with the home so that the court doesn’t have to make the final decision.

In general, there are a few options to consider when it comes to handling the marital home in the event of a divorce. One of the most common options is of simply selling the home and finding a way to split the proceeds of the sale. This is an ideal option in a situation where one spouse cannot afford to completely take over the mortgage. In this case, it may be best for both parties to get rid of the home and, thus, the financial responsibility that comes along with it. The proceeds of the sale may be split 50/50—or another arrangement may be worked out based on equitable distribution.

Another option to consider is having one spouse “buy out” ownership of the home from the other spouse. This may be a good choice in a situation where one spouse wants to stay in the home, especially when there are children involved and the parents don’t want to uproot the children’s lives with a move. In this case, the spouse who is moving out of the home will typically “buy out” his or her remaining stake in the home’s cost. If the home isn’t owned outright (mortgage payments are still being made), then this may require the spouse buying out the mortgage to refinance.

Another less common yet viable option for divorcing spouses is to maintain joint ownership of the home indefinitely. This is most common in situations where a child is just a few years away from finishing high school, and the parents don’t want to put them through the stress or adjustment of a move. In this type of arrangement, one spouse will typically remain in the home while the other moves out, yet both sides continue with the same mortgage payment. In some cases, divorced spouses may even alternate who stays in the home, though it takes a lot of cooperation and understanding to make this type of arrangement work without conflict.

Who is Responsible for The Mortgage?

No matter what you and your divorcing spouse (or the courts) decide, there’s one important thing to remember when it comes to mortgage responsibility and divorce in New Jersey. Regardless of what the courts decide or what is legally outlined in your divorce decree, your mortgage agreement doesn’t change unless you refinance or take other measures to remove a spouse from the home loan.

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This means that even if you’ve agreed to move out of the house and let your spouse take over responsibility for the mortgage entirely, your credit could still be affected if your name hasn’t been formally removed from the mortgage paperwork itself. With this in mind, it’s usually a good idea for the spouse keeping the home to refinance and remove the other party from the loan as soon as possible. In some cases, it may also be possible to reach out to the lender directly and have the other spouse removed from the loan without going through the process of refinancing.

Other Things to Consider

As you can see, there’s a lot to consider when it comes to handling a marital home and mortgage during a divorce. However, even once you’ve reached an agreement on what will happen to the home and who will be responsible for the mortgage payment, there are still some other things to be aware of.

First, understand the tax consequences that can come along with going through a divorce as a homeowner. In the state of New Jersey, the good news is that there are no capital gains taxes or other federal taxes incurred in this situation. However, you may still be required to report the proceeds of the sale when you file your taxes. It may be in your best interest to work with a tax preparation expert or financial advisor to ensure that you are handling the situation properly.

How a Divorce Attorney Can Help

Going through a divorce can be difficult enough when things are amicable, and no shared home or children are involved. However, things quickly become more complicated when you need to figure out what to do with a marital home or who will assume mortgage payments. At the end of the day, the most important thing to remember is that New Jersey is an equitable distribution state, so everything may not be 50/50 if decisions are left to the courts.

Ideally, you and your divorcing spouse will be able to reach an agreement on what will happen with the home and the mortgage so you can avoid leaving your fate up to the court system. Regardless, having a knowledgeable and experienced Hackensack divorce attorney on your side can make all the difference here. A divorce attorney will be able to answer your questions about all the legal aspects of divorce while making sure your rights and best interests are represented throughout the process.

Carrie S. Schultz

Carrie S. Schultz, Esq., the founder of Men's Rights Divorce & Family Law, is certified as a Matrimonial Law Attorney by the Supreme Court of New Jersey and practices solely within the area of divorce and family law. She earned her Juris Doctor from the University of Miami School of Law.

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