27 Sep What Happens to a Mortgage after a SC Divorce?
We have discussed the division of property here before. Who gets what after a divorce and who is responsible for the debts and other liabilities is a big concern for most people. Not all debts are created equal, and this is especially so for a mortgage on the marital home. The mortgage on the marital home is often the largest and most significant of all debts that a married couple has. What happens to it after a divorce is often a mystery to divorcees. We’ll give you some insight in this article.
The Debt on The Home
The mortgage on the home is marital property if it is in both parties’ names. Therefore the responsibility for it must either be decided by the judge handling the divorce case or the settlement agreement that two spouses reach. No party wants the responsibility of paying for the mortgage, especially if one party does not remain in the marital home, but the risks associated with not properly dealing with the mortgage can be devastating financially for everyone involved.
The Risks of Not Removing Your Name from the Mortgage
The judgment of the divorce court and any settlement agreement that two spouses come to amongst themselves are only binding on the two spouses, not the mortgage company. Even if both spouses agree that one party will assume responsibility for handling the mortgage as a part of their settlement agreement, until that party actually goes through with refinancing the mortgage, both spouses will still be liable for the mortgage regardless of who is living in the house.
The issue becomes trickier when one party decides to declare bankruptcy while both spouses’ names are still on the mortgage. An individual who wipes out their obligation to pay the mortgage in bankruptcy will leave the other party holding the responsibility to pay the mortgage all on their own. Any ruling of the bankruptcy court will trump an individual’s settlement agreement in a divorce court. The individual left responsible for paying the mortgage will have no recourse against the ex-spouse who declared bankruptcy.
Problems may also arise when one spouse remains in the home. After a period of time, that spouse may either buy out the other spouse’s interest or sell the home and divide the proceeds. The spouse that remains in the home has very little incentive to maintain the property or to increase its value due to the fact that he or she will have to split the income from the sale at a later date. Furthermore, the spouse that remains in the home has an interest in delaying the sale to increase the length of time that he or she can remain in the home.
Get Help From a Charleston, SC Divorce Attorney
Failure to handle the debt of a mortgage on the marital home is a mistake that many people come to regret later. Many settlement agreements that spouses come to agree to make simple mistakes that cost them dearly when one party fails to follow through with their obligations or finds a way to escape their responsibilities. A family law attorney experienced in handling issues of property division can make all the difference. The divorce attorneys at Klok Law Firm LLC in Mt. Pleasant, SC can assist you in all of your divorce needs, from handling the court proceedings to negotiating a settlement on your behalf.
Contact Klok Law Firm LLC for a free initial consultation.