Dealing With A Mortgage During And After Divorce

Just like every other piece of property that must be divided during a divorce, the mortgage must also be assigned to one of the parties. This can have repercussions on assets and credit.

When there's a divorce there are typically a million decisions that need to get made. Debt allocation, child custody arrangements, alimony, and property distribution are all common issues faced by divorcing couples. The most important decision, however, usually involves the couple's primary residence.

Addressing The Mortgage

For most divorcing couples with a home, there is typically a mortgage. When there is a joint ownership and both parties of a divorce own the residence, there needs to be a decision as to who gets the property.

Whether it's through amicable agreement or a court ordered decree, one is assigned the house. This party, however, is also usually responsible for the mortgage. The divorce decree may stipulate that the party staying is obligated to pay the mortgage or it may indicate that the one who gets to stay in the house has a period of time to sell and free the mortgage lien or refinance the property.

Repercussions Of Failure To Pay

However, whichever agreement is stipulated, a divorce decree does not trump a mortgage contract. In other words, even if a divorce decree stipulates that one party takes over possession of the house and mortgage, the other party can still be legally responsible because his or her name is still on the mortgage note.

(The only way to remove a name on mortgage documents with multiple names is if one party refinances and gets the mortgage to the property is his or her name, the mortgage is paid off with cash, or one party dies.)

So if the party with possession fails to make a timely payment on the mortgage, both parties listed on the note will see a negative impact to their credit scores. Additionally, if default occurs and continuous mortgage payments aren't made, depending on the state, the mortgage lender can go after both parties for deficiency judgments.

Repercussions Of Other Debt In A Divorce

Similar to mortgage loans, credit card debt poses the same problem. If one party is assigned a specific credit card debt through a divorce decree and both names are on the credit card account, both parties' credit scores will be impacted if there is a late or missed payment on the monthly bill. Additionally, the bank or lender could seek recourse from both parties as well for nonpayment.

Seeking Help

These are other situations involving debt and property in a divorce can be complex. Seeking the help of an experienced divorce attorney who can offer advice on the best course of action as it pertains to your situation is advised.