Properties and Finances

Since very few divorcing couples own everything in their life without any debt, a divorce settlement on debts is just as likely to be factored into any divorce agreement. A couple runs up debt together and is going to need to handle those debts when they ultimately split. In many cases one party stays in the family home while the other party moves out and finds a new place to live. In this situation it is customary for the individual whom is living in the family’s primary residence to take over the responsibility of the payments associated with that property. Some courts will rule in favor of subsidizing the mortgage payment via alimony or child support, but it is rare for the court to demand that the vacating spouse contribute to the mortgage payment and general bills associated with the property.

Refinancing is the only way for a spouse to get out of being held legally responsible for the payment in the event of a mortgage default. If both of you signed the mortgage papers, the mortgage company is not interested in who lives at the residence. Rather, your name still sits on the mortgage agreement and therefore there is no way out of not being held legally responsible for the payment of the debt. Some spouses can not refinance under their own name if their income isn’t high enough. In these situations the party still living in the residence is not likely to attempt to refinance.

This carries the potential to seriously impede the process of starting over for the spouse that left. On paper it looks like there is a full mortgage payment to be factored into a pending loan for another home, car loan, or even a personal loan. Choosing not to refinance keeps one spouse tied to a mortgage obligation.

During the proceedings that lead to the divorce settlement on debts is the perfect time for one spouse to stipulate that the mortgage is refinanced upon or soon after the finalization of the divorce. This prevents spouses from holding the exes captive through a mortgage or car payment that was intended to be used for both parties. It also prevents the manipulation of the system when it comes to issues like foreclosure. If you have left the residence, be sure that your divorce lawyer puts a refinancing clause in the divorce settlement on debts to be sure that the financial responsibility of the payments do not fall on the shoulders of someone who doesn’t live there any longer.