Marital settlement agreement © iStock

Dear Bankruptcy Adviser,
My ex filed for bankruptcy and she has not refinanced the properties as ordered in the property settlement agreement. Do I have any recourse?
— Jim

Dear Jim,
I ought to provide some background to give a complete picture of your situation. You filed for divorce. The property settlement agreement, aka the marital settlement agreement, is designed to divvy up assets and liabilities. In that division process, your wife received the house and you got other marital assets. Sometimes, the home is the only asset and 1 person ends up with nothing.

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As part of that agreement, your wife said that she would refinance the property and remove your name from the title and the mortgage loan. The agreement usually gives 1 spouse a specific time period to finish the refinance.

The purpose of this is twofold:

  • It is further evidence that you no longer are the legal or equitable owner of the property.
  • It eliminates your future liability for mortgage payments.

The problem could be that your ex-wife might not be able to refinance the property. In many cases, the house is worth less than what is owed, or a lender will not qualify a 1-income household for a refinance. As much as she probably wants to abide by the agreement, she cannot.

You do have recourse in that you could ask that the family law court find her in contempt of the order to refinance. I doubt the court would, unless you can prove that she easily could refinance the property and take your name off both the title and the loan.

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You could try to do some of the work for her and call around to various lenders. Because you are still on the loan and title, you are also allowed to shop around. However, without a cooperating lender, you cannot make her do the impossible.

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