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What happens to joint mortgage with ex-husband if I file bankruptcy?

Almost 3 years ago I was in a car accident. I have now been served a summons because the other driver is claiming damages in excess of my policy limits. I am waiting for the attorney my insurance company is hiring to contact me. If this goes to court and the other driver is awarded the full amount he is asking for I have read that I can [url=http://www.mortgagefit.com/bankruptcy.html]declare bankruptcy[/url] since there's NO way I could ever pay that amount.

So if I file bankruptcy what happens to the mortgage that I still have with my ex-husband? He lives in the house and pays the bills. I was awarded 60% of the equity in the house when it sells but because of the market we owe about what it is worth. The house is not yet listed for sale but must be by Jan 2010 per our divorce decree.

Also, if the debt becomes his alone, how is this done? Does my name come off of the mortgage and the deed? I ask because I get an employee discount on the interest rate and if my name is no longer on the mortgage the interest rate would increase by a full 1%.

Thank you in advance for any help.

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi maria,

It will depend upon the type of bankruptcy you would file. In [url=http://www.mortgagefit.com/bankruptcy/chapter13.html]Chapter 13 bankruptcy[/url], you may not have to include that mortgage in your bankruptcy filing. If your name is not on the property deed, then you can ask your ex-husband to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] the loan in his name. This will make him solely responsible for the loan. Thus, your name would be removed from the loan docs. However, if your name is on the property deed, it won't be removed automatically. In that case, you will have to sign a quitclaim deed. However, if you transfer the property just before your bankruptcy, it may be considered fraudulent as per the bankruptcy laws.

Thanks

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maria31934's picture
maria31934 | Joined: September 14, 2009 07:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for the response.

Unfortunately neither one of us has sufficient income to qualify to refi solely in our own names. Although we each have the right to buy one another out prior to sale, this is essentially achieved through just a refi because we owe about what the market value of the home is.

I just wondered what would happen to the mortgage if I [url=http://www.mortgagefit.com/bankruptcy.html]declare bankruptcy[/url]. Is the house forced to be sold for whatever we can get? If that's less than the mortgage balance is my part of that debt discharged with my bankruptcy?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi maria!

Welcome to forums!

If you file Chapter 7 bankruptcy and include the mortgage into it, then the lender can sell off the property to recover his dues. However, if you reaffirm the loan and pay it off, then you will be able to save the property. As far as I know, the deficient amount will get discharged in your bankruptcy filing.

Feel free to ask if you've further queries.

Sussane

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maria31934's picture
maria31934 | Joined: September 14, 2009 07:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Sussane,

Thanks so much for your help!

The big question I have is can I do Chapter 7 and include the mortgage if my ex-husband who is also on the mortgage and living in the house doesn't agree? If he cannot refi on his own and buy me out is he forced out of the house?

Thanks again!
Maria

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome back maria,

You would be able to include the mortgage in your bankruptcy filing, your name is on the loan. If your ex-husband is not able to refinance the loan, the trustee would sell off the property and give him his share of the money. The rest of the amount would be used to pay off your dues.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband's ex-wife is threatening him to pay off the second mortage that he aquired in their divorce decree. She's currently responsible for the house, which is what she got in the decree, but she doesn't live there. What happens to my husband and his responsibility for the second mortage if she files for bankruptcy?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Guest,

If she files for bankruptcy, then the lender will come after your husband to recover the second mortgage in full. The ex-wife will be discharged of all her debts.

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