Property division matters frequently dominate divorce negotiations. Spouses have to separate their physical property and financial resources. They also must generally allocate responsibility for financial obligations, such as credit card balances.
Divorcing couples in Indiana may have financial accounts, vehicles and personal property to address when they divorce. They may also have accumulated years’ worth of equity through consistent mortgage payments. How do divorcing couples address their shared home equity during divorce proceedings?
By liquidating the home
In some cases, the simplest solution is to sell the property and divide the sale proceeds. Spouses can agree to a specific split of the revenue generated from the sale of the home after a divorce.
By refinancing
Frequently, especially if there are minor children in the family, one spouse may retain the marital home. In that situation, the spouse who is staying likely needs to refinance the mortgage. They then have the option of withdrawing equity to compensate the spouse leaving the home.
By using other property
Occasionally, one spouse keeps the home and may not be able to withdraw equity due to credit limitations. Other times, there may not be a mortgage to refinance, as the spouses have paid off the loan in full. In such cases, the allocation of other marital property or shared debts can help balance the retention of home equity.
Spouses typically have the option of advocating for whatever terms they feel are fair and appropriate if they can work together. Otherwise, they must litigate, and a judge decides what is reasonable. Having guidance while evaluating different solutions for home equity can make the division of marital property less stressful during an Indiana divorce.