Divorce is an emotionally strenuous experience that leaves people feeling drained. One good thing about divorce is that it is final. Once the court issues a final decree of divorce you are done with your ex-spouse.
As with most things, however, there are exceptions.
Finalized divorces include provisions for the equitable distribution of property between spouses. This includes financial assets, physical property and debt. Debt accumulated during the marriage includes joint credit cards, auto loans and mortgages.
How marital debt is distributed can be negotiated during the divorce process or determined by the court.
Once an agreement for dividing debt is approved, most divorcing couples think the that’s the end of it. However, spouses can be confronted with problem joint mortgages after divorce.
JOINT MORTGAGES SURPRISE DIVORCED COUPLES
The key issue with joint mortgages encountered by divorced couples is that their divorce settlement is an agreement between the two spouses that is enforceable by the court.
However, a joint mortgage is an existing agreement between the spouses and a third party, the mortgage company or lender. The divorce settlement cannot legally bind a third party.
The mortgage company was not a party to the settlement agreement. Therefore, it does not have to recognize any provisions in the settlement pertaining to which spouse is responsible for the mortgage debt.
This is the case even if one spouse signs a quitclaim deed relinquishing their interest in a house to the other spouse.
WHAT CAN I DO ABOUT A JOINT MORTGAGE AFTER DIVORCE?
Signing a quitclaim deed does not release a former spouse from their financial obligation to a mortgage company. It only removes their name from the title to the property.
Most divorced individuals find out about this when they apply for credit to obtain a new home, automobile or credit card. They are denied credit because the records show they have a significant outstanding debt.
The best way to avoid this situation is to consult with a knowledgeable divorce attorney. A qualified divorce attorney can walk you through each step of the settlement process and ensure nothing is overlooked as you proceed with your divorce.
Oxendine & Sauls has a team of experienced divorce attorneys dedicated to ensuring your financial interests are adequately represented.