For most of us, buying a house is the biggest purchase we ever make. So when it comes to divorce, it’s no surprise it’s often one of the primary assets to divide. But how does divorce impact things like home loans? If you end your marriage, are you still on the hook for that debt?
It’s important to know that though divorce changes almost every aspect of your life, it doesn’t automatically alter preexisting financial agreements. Like a home loan.
If you and your ex took on that debt, both of you remain responsible until you take steps to remove your name from that loan.
Rick Jones, one of our founding partners, regularly appears on the Danny Bonaduce and Sarah Morning Show, where he answers family law questions from listeners. One recent caller wanted more information on this very subject.
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Questions about a Home Loan
Caller: “I got divorced back in 2011. My ex-husband and I owned a home together, which we still do. He’s willing to release his interest to me so we did a quitclaim deed. But apparently, all that did was release my interest, but not my responsibility on the loan.
“He’s on disability so he can’t refinance, so I’m wondering if there’s any way to get my name off that loan if he can’t refinance?”
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Rick: “Well, there’s really not a way to get your name off of the loan. I assume you guys weren’t represented when you went through this process correct?”
Rick: “Okay. For everybody else listening, that’s one of the concerns. Everybody thinks I can do this, or I can do that. I can save a couple thousand bucks, and then you have issues like this that come up all the time. Unfortunately, it puts me in the lousy spot of not giving you great news.
“But, what that does mean, think about it from this perspective, the lender. The people that loaned you the money based on the credit, not just of him, but of you and him.
“So they’re not willing to tear that [home loan] up. Why would they walk away from that extra security? So that’s the way to think of it there.
“Now, here’s one possible avenue of success that you might have. Which is, you may be able to go back to court and do what’s called a ‘motion to enforce,‘ where you’re able to say, ‘Hey look, as part of the divorce papers, this was the agreement. Maybe we didn’t write it up the way we should have, but the agreement was that this was ultimately going to be sold or refinanced. I even went as far as giving him a quitclaim.’
“It’s possible the court will look at that and require him to either sell or refinance within a period of time. Now, if he can’t refinance obviously the end result is sell. But that’s one possibility. That may only be a sliver of a chance, maybe a 50/50, but that’s really your only hope.”
Danny: “I’d push for getting it sold. This is something that I did when my ex-wife ended up with the house to sell. I kept looking to see if she sold it even when it was no longer my business.
“It was just driving me…’Does she still have the house where the kids are at, oh that’s not right.’ I looked twice a week, I pushed at getting rid of all the assets and starting a new life without this guy, that’s what I would do.”
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