Divorce but our house is underwater. How do we handle this?

Well, there is a couple of ways you can handle a divorce when your house is underwater. For one, you guys can agree to sell the home in a short-sale. Another thing that can be done is if one of the parties agrees to take the house as part of the marital settlement agreement, (if they are able to continue making the mortgage payments on the home, despite the fact the home is underwater) they can do that as well. Those are typically the ways in which a home that’s underwater is taken care of in a divorce. Any other option is to go through the procedures of foreclosure, that would be another way.