Skip to main content

Divorce With An Upside Down Mortgage On Your House

A divorce is rarely ever just a simple split of spouses, property, and rights and responsibilities regarding children. Divorce most often involves a detailed look into a married couple’s assets and debts and real and personal property, and then dividing these equitably, so that each party receives his or her fair share. The property division in a divorce can be even more complicated when the couple’s home is “underwater" or “upside down." When the couple’s debts exceed their assets, creative strategies and a separation agreement may be more favorable than asking the court to divide the property pursuant to Virginia law.

What does it mean to be “Underwater"?

An underwater or upside down mortgage arises when a homeowner has more debt on their home than the value of the home on the current market. What that means in the divorce context is that a couple may have more marital debt than marital assets, such that even in the case that all the property was to be liquidated, the couple would still be in debt. During a divorce, each party will be faced with determining who will get what debt. Therefore, in a divorce with an underwater home, property division may become a hotly contested issue.

What are the Laws Governing Marital Debts in Virginia?

Under Virginia law § 20-107.3, a court may generally divide property between the spouses. The property division is based on characterizing the property as either separate property, marital property, or hybrid property. However, when a home is underwater, it may be more beneficial to consult with an experienced family law attorney who can draft a separation agreement. A separation agreement can provide for creative solutions to an underwater home, and can take the guesswork out of the judge’s hands.

What is a Separation Agreement?

A separation agreement is essentially a contract between the parties that defines their legal rights and responsibilities, and can outline the property distribution. The separation agreement will bind the parties when the divorce is final, which can smooth the transition from separation to divorce. Additionally, because a separation agreement is an agreement between the parties, they can agree to various strategies for dealing with an underwater home, other than just diving up the assets and debts, which can become complicated and may be even more costly for both parties in the end.

What are some Solutions to Dealing with an Underwater or Upside Down Home in a Separation Agreement?

An experienced family law attorney can craft a separation agreement that can help to save a couple’s home, or at least spare each party from completely damaging their credit or going into bankruptcy. Some solutions to dealing with an underwater home include a short sale, deed in lieu of foreclosure, or a creative financing arrangement. There are numerous other ways to deal with a home that is underwater during a divorce. It is important for Virginia couples to know that they can come to a resolution that can be beneficial for each party in the long-term.

If your home is underwater and you are seeking to get a divorce, you should immediately speak to an experienced family law attorney. You do have options that may save you headache, anxiety, and money.

Additional resources provided by the author

Rate this guide


Avvo divorce email series

Sign up to receive a 10-part series of useful information and legal advice about the divorce process.

Recommended articles about Divorce

Can’t find what you’re looking for?


Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer