Some Wisconsin readers may have questions about how their mortgage or bankruptcy proceedings are affected by divorce. One man got divorced in 2009 and had his name removed from the deed and had it put in his ex-wife’s name. After signing over the deed, he filed for Chapter 7 bankruptcy, which was discharged in March 2012.
Although this was done after the house had been put in his ex-wife’s name, the mortgage remained in the man’s name and was part of the bankruptcy. There is equity in the home and the payments are current. There remains the question of if he should keep the loan the way that it is or get it reaffirmed.
In this case, it was advised for the man to leave the situation as-is. Reaffirming the loan would re-establish the man’s liability that he was able to eliminate through the bankruptcy. As a result of the bankruptcy, he is no longer liable for the mortgage even though his name remains on the loan. The current arrangement would make the man’s ex-wife liable for the loan because she did not file for bankruptcy. As long as the payments are kept current, the house cannot go into foreclosure.
Divorce can become complex when there are additional factors involved such as bankruptcy proceedings and mortgage loans. Individuals who are contemplating divorce, especially those with a complicated financial profile, may choose to contact a Wisconsin divorce attorney. Prior to filing for divorce, an attorney may be able to answer questions and help formulate a strategy. In addition, an attorney may be able to help parties to negotiate a divorce agreement that is satisfactory to everyone involved.
Source: Fox Business, “How Does Divorce Affect Bankruptcy and Mortgage?”, Justin Harelik, July 03, 2013
