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If the house is signed over to you during the divorce process, is it no longer considered a joint mortgage?
Getting divorced won't necessarily remove your responsibility for the debt. It's a commonly believed myth that a divorce decree dissolves a person's liability for a debt if it says they're no longer responsible for paying it. The reality is that a divorce decree does not alter or nullify the original contract with the lender. Once you become a joint account holder, you are contractually responsible for it unless your name is removed by the lender or the account is closed.
What Happens to Joint Accounts When You Get a Divorce?
If you have joint accounts with your soon-to-be ex-spouse, finalizing the divorce won't cancel those contracts or remove your name or your ex-spouse's name from them. Some people are surprised when they go to apply for credit or order a copy of their credit report after a divorce and find joint accounts from when they were married are still appearing as active.
If you are in the process of separating from your spouse, it's important to separate your finances as well, preferably prior to the divorce. Here are some steps to take care of joint accounts and help protect your credit:
- Order a copy of your free credit report from each of the three credit reporting agencies. You can do this for free through AnnualCreditReport.com. Reviewing which accounts are appearing on your credit reports will help ensure that you don't miss any, such as older accounts that may not have been used in years.
- Contact each lender to notify them of the divorce. In some cases, a lender may be able to simply remove one individual's name from the account. If not, you may need to close the account altogether. Keep in mind that if there is a balance on the account, your lender may require that it is paid off before the account can be closed.
- Work with your ex-partner to pay off any joint debts. If the lender requires you to pay off an account prior to closing it, working together to pay off any outstanding debts quickly is your best bet.
- Refinance major loan accounts where necessary. If you or your ex plans to keep a home or car that was financed jointly, refinancing the debt into that party's name alone will ensure that the other party is not held responsible for the balance or any missed payments that may occur in the future.
Can Our House Be Signed Over to Me?
A judge may have allowed you to remain in the home and be responsible for making the mortgage payments, but you will likely need to refinance the balance of the loan into your name only to remove your ex's joint responsibility for the debt. This means that you will need to meet the credit and income criteria of the lender to qualify for the new mortgage loan on your own.
If you are unable to qualify for a new loan in your name only, it may be necessary to sell the home in order to dissolve the original contract. Alternatively, if both you and your spouse agree to one of you keeping the home and leaving the mortgage in both of your names as a joint account, the loan will continue to appear on both of your credit reports, even if you are the only one paying.
Keep in mind that both the balance and the monthly payment amount will be factored into both of your credit scores, and any future missed payments will impact both of you as well.
Thanks for asking.
Jennifer White, Consumer Education Specialist