What Happens with Debts and Mortgages After Divorce in Pennsylvania?

Divorce in Pennsylvania, a legal dissolution of marriage, ripples beyond the realm of personal relationships and digs deep into financial matters. In Pennsylvania, one particularly thorny issue is the division of debts and mortgages.

Divorce Laws and Property Division

Divorce laws in Pennsylvania pivot around the principle of ‘equitable distribution’. The term embodies a commitment to a fair, though not necessarily equal, distribution of marital property. The complexity of these laws deepens when one considers that marital property is not limited to physical assets like homes or cars, but also extends to intangible entities such as liabilities, specifically debts and mortgages.

Pennsylvania’s equitable distribution system underlines several key aspects when it comes to divorce:

  • Classification of Property
  • Valuation of Property
  • Division of Property

The Treatment of Marital Debts in Pennsylvania Divorce

Marital debts refer to liabilities incurred during the marriage, irrespective of whose name is on the loan document. During a divorce, these debts are subject to the equitable distribution principle, implying they must be distributed fairly, if not equally, between the parties.

Marital debts include all liabilities acquired from the date of marriage until the date of separation. These could range from mortgage loans and credit card debts to personal loans and even student loans, granted they were taken out during the marriage. U

The court doesn’t simply split marital debts down the middle. Instead, it considers multiple factors to ensure an equitable division. These may include:

  • Each Party’s Income and Earnings
  • Length of the Marriage
  • Disproportionate Incurrence of Debt

Accurate records play a critical role in debt division. Clear documentation of when and why a debt was incurred can help demonstrate whether it should be considered marital or individual. Similarly, evidence of payment, such as bank statements or receipts, can help establish which party contributed more towards servicing the debt.

Navigating Mortgage Considerations in Divorce

Pennsylvania law outlines three principal avenues for dealing with a joint mortgage after divorce:

Selling the Property – It involves selling the family home and splitting the proceeds between both parties. A few key factors come into play:

  • Real Estate Market: The timing and market conditions can significantly impact the sale price of the home. A robust real estate market can maximize the proceeds, while a downturn may lead to losses.
  • Mortgage Balance: The outstanding mortgage balance is an essential consideration. If the mortgage’s remaining balance is higher than the home’s sale price, both parties may need to
  • Splitting the Proceeds: Once the mortgage is paid off, the remaining proceeds must be divided. This division, like other aspects of property division in a divorce, aims to be equitable and may not necessarily result in a 50-50 split.

Refinancing the Mortgage – One party may decide to refinance the mortgage into their name, thereby taking on sole responsibility for the debt. This path has its unique considerations:

  • Qualifying for Refinance: The party who wishes to refinance must have sufficient income and credit to qualify for a new loan independently.
  • Cost of Refinancing: Refinancing often involves costs, including closing costs, which the party should be prepared to bear.
  • Transfer of Ownership: Once the refinance is complete, the party who took on the mortgage typically becomes the sole owner of the home. This transfer must be formalized through a quitclaim deed or a similar legal instrument.

Retaining Joint Ownership – This decision is generally dependent on mutual trust and future financial stability, and it comes with its share of considerations:

  • Continued Shared Responsibility: Both parties remain equally responsible for the mortgage payments. Failure by one party to contribute can impact both parties’ credit.
  • Future Sale or Refinance: Any future sale or refinance of the property would require the consent of both parties, potentially leading to complications down the line.
  • Occupancy: Decisions must be made about who will continue to live in the home and how expenses related to the home, like maintenance and property taxes, will be shared.

Importance of Legal Assistance: Engle, Kauffman and VanHorn, P.C.

During the complex process of a divorce, expert legal counsel is invaluable. Divorce attorneys in PA, especially the proficient team at Engle, Kauffman and VanHorn, P.C., can guide clients through the intricate legal landscape, ensuring a fair division of marital debts and a strategic approach to mortgages.

Given the significant impact, these decisions will have on your financial future, engage the services of an experienced Pennsylvania divorce attorney. Engle, Kauffman and VanHorn, P.C., seasoned in PA divorce law, can provide comprehensive guidance and representation, ensuring your interests are protected.

Remember, every decision made during a divorce proceeding can have lasting implications on your financial health. Take the step to protect your interests and consider seeking professional legal advice to navigate these choppy waters.