Phone: 301-738-7770
Steven J. Gaba
Phone: 301-738-7770

During divorce, take steps to protect credit

Each and every divorce is unique, and is structured around the life built by the couple who is ending their marriage. One aspect of divorce that is important for all Maryland couples, however, involves the manner in which assets are divided. Property division can be a challenge for many, especially when spouses do not see eye-to-eye on how to share the marital wealth that has amassed during their union.

For homeowners, the family home can become an issue of contention. Some couples will agree to sell the property and divide the assets. Often, however, the course of action chosen is for one party to remain in the home, and the other to take a mix of assets to compensate for his or her share of equity in the property. This can be a good solution for many couples, but also poses a number of risks.

For example, if a home is mortgaged in both spouses' names, it can be difficult to convince the lender to refinance the home in the name of the individual who will retain the property. Lenders are not interested in the provisions within a divorce decree, and are reluctant to make a change that removes one party from collections efforts. If the home goes into foreclosure, having two people on the hook is a better scenario for the lender.

For the Maryland spouse who leaves the home but does not retain any rights of ownership, foreclosure can lead to a number of problems. If the other party fails to make the mortgage payments as expected, both parties will suffer credit damage as a result. This can make it nearly impossible for either party to obtain a mortgage in the near future. Because of this risk, it is essential to have your divorce attorney address the issue of who will remain on the mortgage during the divorce proceedings.

Source: Chicago Tribune, Fate of home uncertain after divorce, Ilyce Glink and Samuel J. Tamkin, Feb. 8, 2014

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