Bankruptcy and Divorce: When Your Ex Files Without Adhering to the Property Settlement Agreement
So you filed for divorce. During the divorce process, a Property Settlement Agreement (also known as the Marital Settlement Agreement) was created detailing out the division of assets and liabilities. In this agreement, it’s common for the family home to be designated to one of the two parties. When this occurs, it is also common for the agreement to stipulate the party “receiving” the home refinance the property to remove their ex’s name from the loan (as well as the property title). The agreement usually provides a deadline for completion of the refinancing.
Refinancing to remove the “ex’s” name from the loan paperwork and removing their name from the title, serves as evidence that they are no longer an owner or legally liable for debt associated with the property/any future mortgage payments.
Sometimes instead of refinancing and removing your name from the title and mortgage paperwork, an ex who was awarded the family home will instead file for bankruptcy without refinancing properties as required in the Property Settlement Agreement. You might wonder if there is any recourse open to you in this particular situation.
It might not be a plan to ruin your life. Your ex probably found himself or herself unable to refinance the property. Many in today’s market find that the mortgage meltdown left them upside down in their homes and unable to refinance. In other cases, a lender won’t approve a “one-income household” for a refinance. Your ex probably wants to comply with the agreement, but have found no viable options to do so.
Your options for recourse in this situation are limited, but there are options.
You could request that the family law court find your ex in contempt of the order to refinance.
The court probably won’t find them in contempt unless you can prove that they could easily refinance and comply with the order, but that they are choosing not to do so.
You could attempt to assist your ex in obtaining refinancing options.
You could try calling around to discuss the situation with various lenders. Your name is still on both the loan the title so you would be able to shop around for rates. But unless you find a lender willing to cooperate, you can’t help. You can’t force your ex to accomplish an impossible task.
If you have more questions about how to handle the negative effects of an ex filing for bankruptcy, contact the southern California bankruptcy experts, Westgate Law bankruptcy attorneys. We can help you navigate the issues of bankruptcy and divorce.