How to Handle Mortgages in case of a Foreclosure after Divorce?
I co-signed a mortgage with my husband four years ago. Last year, after filing for divorce, I received a foreclosure notice from the bank and found out that my husband had been defaulting on the mortgage for more than a year. When I approached the bank, requesting for short sale to pay off the mortgage, I was told that the short sale needed both our signatures on the documents.
I also brought up the matter in the court during a hearing but my husband and his family testified that they would make the loan current. The judge agreed to his pleas and said that I could sign off the house to him and be debt-free after he paid off the loan during the time given by the judge.
I have tried to contact him via his attorneys since then but to no avail. He has not cleared any dues till date and my credit is completely ruined. I have also come to know that the house is now for sheriff sale and nothing has been done by him to pay off the mortgage. He has also recently bought a house despite the fact that he has filed bankruptcy.
Is there any way to make him pay the mortgage or to salvage my credit report?
These situations are very messy and are becoming increasingly rampant with the worsening of the financial situation worldwide. When couples go through a divorce, the partner who must pay the mortgage, does not and the other partner’s credit is ruined. After going through your question, this is what I have gathered.
- Court’s Judgement
- Your Credit report
The problem with this situation is that how can a judge free you of the liabilities with the mortgage when you had initially agreed to pay the loan amount by co-signing the loan. Since you had co-signed the documents, you share equal responsibility of coming current on the loan. To do that, the lender has to be present and has to agree to it.
Take up the matter with the Credit bureau and try to convince them of the situation. But you need to produce supporting documents to support your claim. It can be documents of the court proceedings or some other papers. The best solution, though, would be to request the lender to eliminate the information. But be aware of the fact that if the lender was not present or represented at the court hearing, he may not agree to cooperate.
Your husband has left you with the responsibility of the debt and a huge loss when the property is foreclosed upon, when he filed for his bankruptcy. Along with this, you will also have to make tax payments on the cancelled debt. You can seek exclusion and be exempted, though.
The only way out for you seems to be by filing for bankruptcy yourself. Once that is done one can go about rebuilding your credit from scratch and then buy a new home. But in case you want to avoid this situation, consult a tax consultant attorney about how the foreclosure might increase the tax burden on them. You should also talk with a bankruptcy attorney to find out ways to resolve the situation after foreclosing on the property.
Always remember that the best way to get out of this situation is to be polite and firm with the mortgage owner. That way a lot of hassle can be avoided. Also the proper attorneys must be consulted before taking a decision and for possible solutions.