If you are getting divorced, you should be aware of some potential complications when it comes to your home’s mortgage. Divorce settlements may spell out who gets to stay in the home and who is obligated to pay the mortgage, but this does necessarily settle the score. So beware. By educating yourself about potential pitfalls sometimes faced when getting divorced, you may avoid financial ruin down the road.
If your name is still on a mortgage, divorce does not relieve you of the obligation if your ex defaults, no matter what divorce decree states. Divorce courts do not have the power to relieve your liability to lenders or mortgage companies. Often, the “out spouse” is advised to quit claim the deed on the house to the “in spouse” as part of a settlement agreement. Doing so only removes your name from the title, not the mortgage. Divorce court documents may give you a false sense of security, but unless the property has been refinanced into the name of the “in spouse” only, this situation can be very dangerous indeed.
When getting divorced make sure you divorce your joint debts when you divorce your spouse!Ideally it’s best to divorce all joint debts before or at the time of final settlement. If that isn’t possible because maybe you can’t qualify to refinance at the present time, at least be sure your attorney includes an indemnity clause that allows you to have recourse against your spouse if he/she doesn’t live up to their obligations under the terms of your settlement agreement. When getting divorced you should understand that the mortgage can leave you financially vulnerable over time.
Getting divorced can have a lasting impact on your financial well-being, so always be sure to get advice and support from a knowledgeable financial professional BEFORE you sign on the dotted line.