Divorce brings a multitude of changes and challenges, one of which involves dealing with shared assets, like a family home. Recently, Sheila, a reader, brought up a similar query:
“If divorced and my ex-husband is on the deed to the house, I am unable to refinance my home, which was given to me through the divorce. Can I file bankruptcy, and would the bankruptcy judge order the lender to get his name off the mortgage?”
This is a common concern among many divorcees and has several intricacies. At Westgate Law, we are here to provide clarity and guidance.
The Limitations of a Bankruptcy Judge
Recognizing the limitations of the authority of a bankruptcy judge in these situations is crucial. A common misconception is that bankruptcy courts can directly influence mortgage agreements or compel lenders to remove a name from a mortgage.
Unfortunately, this is not the case.
The jurisdiction of a bankruptcy judge is quite specific. It does not extend to ordering lenders to refinance mortgages or alter their terms.
The Role of a Divorce Decree
A divorce decree, while legally binding, does not automatically alter your obligations to your creditors. You finalize your divorce with this formal court order, which grants a marriage termination. But you must understand one harsh truth: A divorce decree might issue a judgment for the dissolution of marriage and stipulate the division of debts and assets between you and your ex-spouse, but creditors are not party to these agreements. They are primarily concerned with the continuation of payments, regardless of any changes in your marital status.
Legal Recourse and Protection
Despite the marital friction, there is a silver lining in the current case: The divorce decree does offer some protection. If the ex-spouse fails to comply with the court-ordered debt responsibilities, Sheila can bring him back into court. He can be brought to the family court, and the court can enforce payments through wage garnishment, levying his bank accounts, or through other legal means to adhere to the agreement.
The Reality of Refinancing
In Sheila’s situation, neither a family law judge nor a bankruptcy judge can order a lender to refinance her mortgage. Refinancing a mortgage post-divorce is a complex process and solely depends on the current or potential future lender. The loss of dual income post-divorce can further complicate this process. It is contingent on factors like credit score, income, spousal or child support, and equity in the home.
The Way Ahead
If you are facing a similar situation, remember: The connection to your ex-spouse through a joint mortgage can be a lingering tie. Over time, as your financial situation stabilizes and your credit recovers post-bankruptcy, you will have the opportunity to refinance the mortgage, potentially removing the ex-spouse’s name from both the loan and property title. Until then, it is not possible to compel the lender to either refinance the loan or remove the ex-husband’s name from it.
Looking To Explore Your Options? Contact Us Today
At Westgate Law, we understand the complexities and emotional unrest in navigating post-divorce financial matters. Our skilled attorneys are here to offer expert guidance and support every step of the way. Book a consultation today, and we will help you find the best path forward. Call 800-891-1995 – a new chapter of your life is just a conversation away.