From Law Office of Russell D. Knight – Illinois Divorce With An Upside Down Mortgage explores the complex financial decisions facing couples navigating divorce when their home is worth less than what they owe. Drawing from nearly two decades of family law experience, this episode breaks down how Illinois courts treat negative equity, what legal options exist for divorcing homeowners, and how debt is handled in cases of upside-down mortgages.
Russell D. Knight, a seasoned Chicago divorce attorney, shares practical insights on dividing marital property under 750 ILCS 503, especially when a mortgage is underwater. Listeners will learn what happens when one party chooses to keep the home, how indemnification works in marital settlement agreements, and why language around refinancing attempts can make or break post-divorce financial stability. Knight emphasizes how courts aim for fairness, not fault, in asset division—even when there’s no asset at all.
The discussion also delves into the options available when neither party wants the home, including short sales and deeds in lieu of foreclosure. With examples from cases like Morse v. Donati and First Illinois National Bank v. Hans, Knight explains how mortgage lenders may forgive debt in exchange for avoiding foreclosure proceedings. The episode underscores the importance of mutual agreement between spouses, as courts cannot compel participation in these debt-resolution strategies.
Finally, the podcast touches on the legal implications of doing nothing—when foreclosure becomes inevitable and lenders intervene directly in the divorce process. Quoting statutes like 735 ILCS 5/2-408(a) and 750 ILCS 5/403(d), Knight outlines how banks can become parties in a divorce to recover debt. Illinois Divorce With An Upside Down Mortgage is essential listening for anyone facing divorce in Illinois with real estate debt, offering clarity, foresight, and the legal knowledge to make informed decisions.
Law Office of Russell D. Knight
1165 N Clark St #700, Chicago, IL 60610, United States
(773) 334-6311
