||Ask Dr. Don
Mortgage and divorce
My wife recently bought a $140,000 house. Now we may be getting
a divorce. Can she buy me out? How do I get my name off the mortgage
when she can't afford the house with only her income?
You're right to focus on the mortgage. The divorce court will decide
who gets the house. Community property states have different rules
than non-community property states, but in both cases your assets
will be classified and then allocated by the court.
Unfortunately, lenders won't let you decide that you
are no longer responsible for making the mortgage payments if your
ex-wife gets the house. A divorce settlement doesn't change a couple's
joint obligation to their creditors.
If you want to get your name off the mortgage, and
she can't qualify without your income, you need to either sell the
house or she will have to get a friend or family member to co-sign
the note with her on a new loan.
Keeping both of your credit ratings intact through
a divorce requires some work. If your spouse is only an authorized
user on your credit cards, you should be able to change those accounts
back to individual accounts with you as the sole authorized user.
Creditors aren't required to change joint accounts
to individual accounts, so repaying joint credit, and individual
credit in community property states typically remains the responsibility
of both spouses.
Close all the joint accounts. Request that the creditor
note that the account was closed at your request. They will have
to list that on your credit report and that helps later when you're
applying for new credit.
If you can't pay off the balance to close the account,
send a certified letter requesting the account be closed to future
charges and stating that you will not be responsible for new charges
after a specified date. Send the letter certified mail and make
a copy for your records.
Avoid the temptation of letting the bills run up and
keep making on-time payments for at least the minimum amount due
on your bills during the divorce. Missed payments can show up on
both of your credit reports and stay there for seven long years.
It's hard to get on with your new life if you can't get any credit
to finance that life.
Get a copy of your credit report now to help you keep
track of the changes you need to make to your accounts. Then either
subscribe to a credit monitoring service that notifies you of activity
on your credit report or get another copy of your credit report
in a few months to make sure that the changes have taken place and
that there aren't any new accounts or credit applications.
Use this Bankrate
Web page to contact the credit reporting agencies for a copy
of your credit report or to subscribe to a credit monitoring service.
-- Posted: Aug. 20, 2001