Sell or auction jointly own flat with spouse

A.Dear Sir,
Joint Ownership of Property
Differentiating co-owners and co-borrowers
Joint-owners or co-owners are those people who have a share in the said property. More than one person can be the owner of a property. Joint property owners most of the times are spouse or it could be parents, children or siblings. A property can also be jointly owned with anyone- it could be friends, colleagues, distant relatives etc.
While there are no restrictions in owning a property with anyone, joint home loans come in with certain restrictions. Banks do not sanction joint home loans for relations other than husband-wife, parents and children and in certain cases for brothers, provided they have joint ownership.
Co-ownership of property not is generally mandatory for considering the income of applicants for a loan. All co-borrowers are equally responsible for repayment of loan taken from the bank.
Who is liable to repay the loan?
The liability to repay the loan obtained lies equally with all of the applicants. For example, let us suppose that a working couple has applied for a joint home loan and after few years, the wife stopped working and the husband continues paying the loan EMIs by himself. Now if he had temporarily stops working due and the EMIs could not be paid, the bank serves notice for nonpayment against both husband and wife, as they are equally responsible for loan repayment.
What happens if you become a loan defaulter?
Once you become a loan defaulter, the bank will start the process of taking over your property. They can arrange an auction to sell your house/flat and recover their due amount. If you want to take any action, you need to take before this auction. Apart from this, your credit score will also be hit hard and you might not be eligible for loans in the future. This can be the worst thing to happen to you.
What are the options in this situation?
The best option for you would be to negotiate with the lender upon this. Banks will be ready to talk you over this issue rather than going through the tiresome process of taking over your asset. You can reach out to them with the past documents of EMI payments for this loan or the previous loans that you have cleared. Let us see what all options you have in hand:
1) Ask for a grace period - You can seek a grace period from the bank in order to continue with the EMI payments. You can clearly explain to them the reasons for not being able to pay EMIs such as loss of job or dip in sales of business, etc. Bank may be willing to give you the grace period for resuming EMI payments with some penalty.

2) Loan refinancing - There could be a case where the interest rates have gone up and hence you may not afford the increased EMI. You can talk to the bank to restructure or refinance your home loan. They can increase the tenure of the loan as a result of which your EMI would go down. Though this will result in you paying more, it will be better than losing possession of the property.

3) Counseling centers - There are counseling centers to help you with this issue. They would provide you the appropriate options based on your situation. They will also give you fair knowledge on the things to be followed so that you do not fall into a debt trap. Dena Bank has a credit counseling center which does exactly this.

4) Liquidating your investments - This will be the final step that you can resort to, if the above options do not work out for you. You can liquidate your existing investments such as deposits or mutual funds to pay the EMIs. You can also use this amount to make part payment for the loan which will reduce the EMI going forward.