Parker Law Blog

Owning a home is, for many in Colorado, the "American Dream." People will spend years saving for a down payment so that they can take out a loan to purchase the home they hope to live in for years to come. Yet, they need to understand that taking out a mortgage entails certain obligations.

When taking out a mortgage, the homeowner agrees that they will pay back what they owe to the bank, with a certain amount due each month. It is, essentially, a contract. So, if a homeowner fails to pay the mortgage, they have broken that contract. The bank then has the ability repossess the house so that it can recover its investment. The repossession process is called "foreclosure" and it can be a frightening experience for homeowners who have simply fallen on hard times and cannot pay their mortgage.

It may not be time to file your 2018 taxes yet, but people in Colorado should be aware of some significant changes to current tax laws that also affect family law issues they may face, especially if they have decided to end their marriage. Understanding how these changes will affect a divorce is critical to making decisions that are appropriate.

Under current law, those who pay spousal support are able to deduct these payments on their federal income taxes, and those who receive spousal support must report it as taxable income. However, under a federal tax bill passed in 2017, starting in January 2019 spousal support payments are no longer tax deductible to the paying spouse, and the receiving spouse need not report them as taxable income. Therefore, some couples may want to finalize their divorce before 2019, so they can stay grandfathered under current tax laws.

While some couples in Colorado marry young without much by way of assets to their names, it is not unusual for couples to marry at older ages these days, or even to divorce and re-marry a second time. This also means that it is not unusual for couples to enter into a marriage with significant assets of their own. Some of these assets may be investments, retirement accounts, bank accounts or even a house.

It may seem reasonable that whatever you entered the relationship with, should you divorce, you should be able to walk away with. However, property division in a divorce is much more complicated than that. Property in a divorce will be classified as either "marital" or "separate." Marital property is generally that which a couple obtains over the course of their marriage and is divided equitably between the spouses. Separate property is that which a party owns prior to getting married. However, if separate property is combined or "commingled" with marital property, it loses its status as separate property. It becomes marital property, and thus is included in the divisible estate.

When a person in Colorado is facing foreclosure, it can be incredibly stressful. After all, that person may have tried selling the home at a price that would allow them to pay off their mortgage, but could not find a willing buyer, especially if the value of the home is less than what is owed on it. And, losing one's home to foreclosure can be a terrible blow that only exacerbates a person's financial troubles. If a person finds themselves facing foreclosure, they may have some options for stopping the foreclosure process. One of these options is a short-sale.

In a short-sale, the lender is willing to release the homeowner from some or all of their mortgage obligations even if the homeowner sells the home for less than it is worth. This could put a stop to foreclosure. In addition, a homeowner who sells their home through a short-sale will not take the same credit hit they would experience if their home was foreclosed upon.