Struggling to make ends meet puts a strain on the best of relationships, and if it lasts for a considerable period of time and/or is extreme, overcoming this challenge may prove more than a couple can bear. Marital assets and debts must be divided in divorce, and when finances start to break down, the ramifications can reach all the way to the possible loss of a home through foreclosure. Navigating the divorce process is hard enough in straightforward circumstances, but it can become quite complicated when an active foreclosure is being sought, because the mortgage lender has a legitimate interest in how this asset is divided. This situation may be further complicated if one spouse wants to attempt to save the home and assume sole possessory rights and ownership.
In an unusual case, an Illinois appeals court upheld a default judgment that terminated the interest of a divorcing couple’s mortgage lender in the marital home, which was in the middle of a foreclosure, because it failed to respond to a complaint by the husband challenging its validity. While uncommon, this case highlights how intertwined a divorce and a foreclosure can be.
Who Is Responsible for the Debt?
Financing the purchase of a home involves the legal assumption of the obligation to repay a promissory note, the contract that outlines how long and how much the buyer must pay to satisfy the loan. In addition, a lien is placed on the property, which gives the lender the right to repossess the property in the event of default. Most couples jointly sign these documents, making both spouses liable to meet the terms or face foreclosure....
One of the perks of marriage is sharing and receiving benefits from a spouse’s property and income. However, this can become a huge negative when a couple divorces.
In addition to dividing marital assets, a divorcing couple is also expected to divide marital debt. Deciding how to handle these obligations can be tricky, and both parties may benefit from settling property division before a divorce is finalized, or at the very least, via a private agreement.
If the Court gets involved in deciding this issue, Illinois follows the equitable division of marital property system in divorce. Equitable division requires Courts to determine the fairest way to split a couple's marital property by taking into account a variety of factors set forth in Illinois statute. In practical terms, this may mean the division is not equal. Moreover, as the division concerns marital debt specifically, how the debt was accumulated can greatly influence how a Court decides to allocate that debt....