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Home Ownership and Divorce: An Interview with Kurt A. Muller of The Muller Law Firm, LTD.

By Kurt A. Muller

Tell us a little bit about your firm and the areas of law that you practice.

The Muller Firm Ltd. is a full-service law firm and has concentrated in Divorce, Custody and Family Law since 1990. Among the numerous adjuncts to our practice are Estate Planning, Contract Litigation, Real Estate closings, negotiations for Loan Modifications and Bankruptcy.

What are the main options for homeowners who are going through a divorce?

For homeowners going through a divorce there are generally four options:

1) The parties agree to place the property for sale and after absorbing the "costs of sale" (e.g. brokers fees, title insurance, tax/transfer stamps etc.)- using the net equity to satisfy any/all outstanding marital debts, and splitting the remaining surplus, if any, between themselves in an "equitable proportion".
2) One party agrees to keep the home and buys out the other spouse by giving them consideration for this value in the form of a credit against other tangible assets of the estate, for example pension benefits that might otherwise be split according to the number of years the parties were married while the pension plan accrued equity. In this scenario the party retaining title will often be asked to refinance the mortgage so to remove the spouse who is renouncing interest in the property from any further liability under the mortgage or from other suits or liens.
3) Agreeing to "short sale" a property with negative equity (i.e. "underwater") so that both spouses are absolved from any further responsibility after the dissolution of their marriage.
4) One spouse agreeing to take full responsibility for a property either in foreclosure or underwater- with the expectations of being able to correct the situation after the divorce while providing indemnification to the other spouse to hold them harmless from any/all further claims by creditors.

How would you recommend that people in this situation decide whether to keep or sell their home?

For those who are considering a life change, or who are currently embroiled in dissolution proceedings, take heed: In those unfortunate 10% of Illinois divorce actions that actually culminate in a trial- rather than a settlement- trial courts are notoriously insouciant towards micromanaging the homeowners' best interest when compared to achieving a prompt resolution. Consequently, trials generally end with the house being sold irrespective of any creative options that might have better served the parties and/or their finances. Should one find this news disquieting, insist on revisiting your options via an amicable (and less costly) settlement.

What are some of the biggest challenges that homeowners face during a divorce?

Often, divorcing spouses have to think about others than themselves. The biggest concern of all parents is the future and welfare of the children. Will future lodgings accommodate their needs for safety, education and peace of mind?

Are there circumstances when it would be best for people to sell their home and start looking for a new place to live?

In those instances where a couple can no longer afford to keep their home, or where the children's primary care provider can no longer afford the family's former accommodation, with or without child support and/or maintenance- serious thought may have to be given to a sale, a move and renting versus owning a residence. A divorce offers the opportunity to seriously reassess your resources and ability to live within your new means. Take it seriously and regard it gratefully. Second chances in life are rare and someone in a dissolution proceeding may ultimately view these changes as the opportunity to take a new step in the right direction.

After the dust has settled and your divorce is final one may be wondering how this life started anew has affected their credit and the ability to get a new credit, more credit and, perhaps a new car, and/or new home.

From your experience, do you have any advice for recent divorcees who need to buy a new home?

A skilled practitioner should contemplate those needs for his client with the divorce settlement and decree that they've drafted. Provisions should be made to provide for mortgage refinancing to remove the other spouse from obligations attached to a house. And, parties with a superior earning capacity are often required to cooperate in the reestablishment of credit worthiness for the divorced spouse with less income or expectation for future assets. The best advice for these spouses is to start reestablishing credit for themselves in their own name. Get new credit cards. Buy a car on credit. Prove your new worthiness to creditors and yourself.

The longest journey begins with a single step. And many of those steps may be unsteady, but keeping a persistent course should ultimately take you from where you are to where you want to be.

What's the best way for people to contact you and your firm?

For those with questions or comments, please feel free to contact our office. We will be pleased to speak with you.

Kurt A. Muller
The Muller Firm, Ltd.
The Muller Building
110 West Grand Avenue
Chicago, Illinois 60654
(312) 467-6700

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