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Ask Dr. Don

Mortgage and divorce

Dr. Don,
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?
Dan Discord

Dear Dan,
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.

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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

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