The most expensive asset a couple typically purchases together during their marriage is a home. Unlike vehicles bought as a couple, partners cannot take the property with them after their divorce is finalized. Deciding how the house is disposed of becomes difficult if one partner wants to keep the house while the other person wants to sell. Even if the partners can agree on one partner leaving the house, both adults listed on the mortgage remain liable for the loan. Mortgages can cause post divorce credit problems for which many are completely unprepared.
During the divorce process, a judge may assign certain debts to each spouse or the partners themselves may come up with a suitable division of debt. However, the original creditors often continue to pursue both parties who are listed on the mortgage regardless of court orders or signed agreements. Lenders are not always bound by the divorce settlement and final decree leading to them contacting both parties if mortgage payments are late. If the spouse who has remained in the house is late making payments, your credit could suffer as a direct result. Divorce often negatively impacts your credit score and when a mortgage is involved, the impact is magnified.
One way to avoid continued liability for a mortgage loan after a divorce is for one spouse to refinance the property, removing the name of the spouse who is no longer living on the property. Unfortunately, qualifying for a new loan after a divorce is not always easy. Unless the home has a small mortgage or the spouse remaining in the home has a high income that a lender can easily verify, the spouse might not qualify for refinancing in a timely manner. Establishing credit independently after a divorce takes time, and even with perfect credit, a lender may still require a cosigner due to income issues. If the judge has given you a specific time frame to refinance the home or sell it, a stressful situation can quickly become overwhelming.
After taking precautions to prevent an existing mortgage from lowering your credit score through the use of court ordered deadlines, explicitly worded written decrees, and specific settlement agreements, there are no guarantees that your spouse will comply. A former spouse who has recently fought you in a contentious divorce will not be in any hurry to help you protect your credit. A purposefully non-compliant spouse can leave your credit in ruins by paying the mortgage late or allowing the property to enter foreclosure. Even though a decree with clear stipulations can create a strong case for future litigation, it will not always help you resolve your immediate problem. A vindictive spouse can use a joint mortgage to damage your ability to rebuild your life following a divorce.
A divorce involving a joint mortgage requires attention to detail to protect your good credit or make rebuilding credit after a divorce easier. Consulting a firm with division of property attorneys familiar with handling divorces involving joint mortgages is the best way to protect yourself. The attorneys at Vayman & Teitelbaum are able to provide the aggressive representation needed to preserve your credit during a divorce. Our team is ready to answer any questions you have and help you determine the best way to approach your divorce and division of assets. Contact one of our four conveniently located Atlanta area offices today to schedule a consultation.