Divorce: Mortgages, Car Loans, and Joint Credit Cards

How do I get my name off the mortgage when getting a divorce?

How do I get my name off the mortgage when getting a divorce?

Getting your name off the mortgage as part of the divorce requires some planning to ensure it’s done quickly and properly. There are different ways to accomplish getting your name taken off the mortgage, but all depend upon the property award in the divorce decree and the specific circumstances. Remaining co-borrowers on a mortgage can be problematic on many levels, making it difficult to monitor payments while creating a source of continuing parental conflict with shared custody.

When the marital home is divided in divorce, only rarely do former spouses remain co-owners holding title in common or as joint tenants. More often than not, the spouse who leaves the marital home must convey, or quitclaim, all right, title, and interest in the property to the spouse who keeps the home. Once title is transferred, the non-owning spouse’s name may be removed from the mortgage debt, too. There is more to it, though, as discussed below.

Awarded the house in the property settlement, the owning spouse gets the quitclaim deed and should be individually responsible for paying the home loan. There are several ways to get your name legally removed from that mortgage:

• Release of Liability: The first option is to notify the mortgage lender of the divorce and the other spouse’s sole responsibility for the loan going forward. Ask the lender to forever release you from liability for the debt so that, in the event the other spouse defaults on the loan, the lender cannot come after you for payment. Understand, the lender is under no legal, ethical, or moral obligation to let a divorced borrower off the hook. But under the right circumstances a lender might agree to execute a release of liability. For example, if very little is owed on the loan, payment history is positive, income is stable, and credit scores are good, then the mortgage lender may be favorably inclined to release a former spouse from liability on the promissory note. Or not.
• Loan Satisfaction: One sure fire method is paying off the promissory note in full. Satisfying the loan will clear the real property of the lien, freeing both spouses from further liability. During property settlement negotiations with your attorney’s assistance, look closely at all assets and debts – marital and separate – to determine if loan satisfaction is feasible. Finding the cash or bringing in a new investor, such as a parent, does happen. Read about property settlement in Tennessee divorce and examine your settlement options.
• New Loan with a Different Lender: The spouse awarded the house can qualify individually for a new loan without the other’s financial involvement. The new loan pays off the original loan and might even provide home improvement funds for repairs and remodeling.
• Refinancing the Loan: Refinancing could be a perfect solution for spouses who co-signed the original loan. As with the new loan discussed above, the individual borrower must complete a loan application and qualify based upon his or her income, expenses, and financial resources.
• Loan Assumption: A loan assumption may be possible with certain types of loans. In that instance, the spouse awarded the marital home assumes the entire loan obligation while the other spouse is released from any liability for non-payment. The individual borrower will still need to qualify to assume the loan. Loans allowing one divorced spouse to assume legal responsibility for the whole financial obligation include VA loans, FHA loans, and ARM loans in the adjustable period.

How do I get my name off a car loan when getting a divorce?

How do I get my name off a car loan when getting a divorce?

With divorce comes the task of getting your name removed from debts attached to assets you no longer own, starting with the car loan. When spouses co-borrowed to acquire a new or used car, the vehicle (if not sold) will be awarded to one spouse or the other. Implementing this court-ordered property distribution requires, first, a vehicle title transfer and, second, removing the non-owner’s liability for the debt.

Is there a hold harmless clause in the marital dissolution agreement? Although a good way to prevent your former spouse from demanding payment from you on a joint debt post-divorce – holding you harmless from liability – creditors are not parties to that agreement and, consequently, are not bound by it. If you do nothing, then you run the risk of being sued for payment by the creditor following the other spouse’s loan default and car repossession.

3 Ways to Get Your Name Off the Car Loan

There are three ways to get your name off the car loan. By thoughtfully allocating assets and debts in the property settlement, it may be possible for the spouse receiving the vehicle to simply pay off the car loan. A new motor vehicle title would reflect one owner with no lien – ownership is free and clear.

Refinancing the original vehicle loan with the same lender is another option. The original loan the spouses co-signed for gets paid off by the same bank making a new loan to one spouse. For the spouse awarded the vehicle, this process typically involves completing a loan refinance application and qualifying financially.

A new loan with a different lender is also an option. The original loan is satisfied with the original lender releasing both spouses from liability forever. The new loan is the sole responsibility of the spouse awarded the vehicle in the divorce. A personal loan from a family member, friend, or employer may or may not be secured by the borrower’s property. If a secured transaction, then the car collateralizes the loan and the lienholder’s name goes on the motor vehicle title. With an unsecured loan, the title will not show any lien because the car is not collateral for the loan.

In divorce, how do I get my name off a joint credit card?

In divorce, how do I get my name off a joint credit card?

How to divide marital debt in divorce is a big concern for spouses, a serious matter to be negotiated with their attorneys’ assistance. The decree will specify who is saddled with which credit card debt in the equitable property distribution Tennessee law requires. But then what?

The prudent action is to terminate co-responsibility on each joint credit card. The spouse awarded the MasterCard debt, for example, will need to get the other spouse’s name off the joint account. As simplistic as this may seem, one joint cardholder cannot unilaterally remove the other joint cardholder. How do you get your name off a joint credit card? Consider taking one of the following steps:

• Close the Account: Pay the debt completely off and close the account. This is a credit card account, not a mortgage. The bank may require both signatures, which is fine – make signing the paperwork part of the divorce process. Cardholders can close their joint account for any reason or no reason, so long as the debt is paid in full. Closing the account is also an opportunity to reflect on whether carrying credit card debt is such a good idea. Should divorce destabilize finances, a pay-cash-as-you-go lifestyle may be the prudent course, at least until the dust settles.
• Open a New Account: Open a new account for a sole cardholder. Shop around for the best deal. Because this is a post-divorce financial arrangement, keep the credit limit manageable for a one-income household. Rest assured, there will always be another credit card offer. Although not ideal, it may be useful to open a new account by balance transfer. That is, the balance on the old credit card in both names gets transferred to the new card in one name. Always read the fine print before completing any credit card application!
• Authorized User Account: This will not help spouses who opened the account together. They signed a joint liability agreement with the creditor and a subsequent divorce does not modify the contract. But it’s possible the credit card account is actually an authorized user account, not a joint account. There’s a big difference between the two. With an authorized user account, the spouse who was not decreed responsible for the debt and who can no longer use the card may be removed if merely an authorized user. This is a situation where one spouse had a separate credit card account and then added an “authorized user.” The cardholder should call the bank immediately after the divorce so there’s minimal time for new unauthorized charges to make their way onto next month’s statement. Terminate any auto-billing to the account when no longer the sole cardholder’s responsibility, such as monthly utility bills on the other spouse’s residence.

The changes discussed above should be made promptly. Tread carefully, though. Unless the other spouse consents or the judge specifically grants permission, carrying them out before the divorce decree is entered may violate Tennessee’s automatic injunction. Jumping the gun – transferring titles and removing names too soon – could land a spouse in contempt of court. Consult an attorney first. Then make a plan of what to do and when.