You can dump a bad spouse, or a bad house. But try getting out from under the mortgage.
With all the problems that can arise from marriage, especially when it falls apart, it’s a wonder anyone ever ties the knot.
Here’s this week’s question:
I’ve been divorced for 3 years. In the process of working out a divorce settlement I agreed to a cash settlement, while my ex-husband retained the house. Although I gave up the house, I was not able to remove my name from the mortgage because my ex was unable to secure a loan, based on his credit alone. Part of our settlement was an agreement that he would remortgage as soon as he was able. But in the past 3 years, not only has he been unable to remortgage, he’s actually managed to come within weeks of a foreclosure on the home. Is there anything I can do legally to remove my name/my credit from the mortgage (and his poor financial management) so I can move on with re-building my own credit?
The thing about debt is, it looks different depending on who’s doing the looking. For example…
How Kathryn sees this debt
When you’re standing in the shoes of an ex-spouse, being held responsible for a debt like this must seem indefensible.
Kathryn doesn’t own the house and doesn’t live there. A court gave the house to her ex, and he agreed to refinance it and get the mortgage out of her name. Why should she have to worry about it?
How Kathryn’s lender sees this debt
When you’re standing in the shoes of a lender, going after Kathryn is totally defensible.
When Kathryn and her ex applied for this mortgage, they both agreed to be individually responsible for the entire debt. They didn’t say they’d stop paying if one or both of them no longer liked the house or each other. They didn’t sign anything saying one could get off the hook if they got divorced, or one signed their ownership over to the other.
What they agreed to in writing was that they were both fully liable for the entire debt, come hell or high water.
And now, here it is: hell and high water.
Both points of view are understandable. Unfortunately for Kathryn, however, the only view that matters — the one a court would recognize — is the lender’s.
It’s important to remember that although you’re free to merge ownership of just about anything — married or not — your credit is your own. There are no joint credit histories. When you sign your name on the dotted line, you’re obligated. The only way to remove yourself from a joint debt is to remove the debt, either by paying it off, selling the asset, or refinancing it in the other person’s name.