When you and your spouse make the hard decision to get a divorce, you know that you will need to figure out how to separate your assets and special belongings. It is important for you to be aware that in addition to assets, you will also have to identify how to allocate responsibility for your shared debts. If you own a home together, this means you will have to address the liability for your mortgage.
As explained by The Mortgage Reports, a lender may consider anyone listed on a home loan to be financially responsible for the mortgage payments. Because of this, if your spouse wants to keep the house after your divorce is finalized, you will want to ensure that your name is removed from the loan. If that is not possible, your spouse should apply for a new loan in their name only.
Some people may think that stipulating responsibility for a home loan in a divorce decree should protect them against collection efforts or negative credit bureau reports should their spouse fall behind on mortgage payments, but that is not the case if the original joint mortgage remains in effect. The only way to truly protect yourself against these types of situations is to address the loan directly. Some loan programs do allow one person’s name to be taken off the account.
If you would like to learn more about how to protect your credit history and financial future when getting divorced with a mortgage, please feel free to visit the asset and debt division page of our divorce and family law website.