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Credit and Divorce – Who Will Pay You Back?

September 14, 2017 A joint mortgage connects people for years. In the event of divorce, the ex-spouses are jointly and severally liable for the commitment. Failure to pay the debt leads to enforcement proceedings. How can a divorcee get out of the problem loan? We invite you to read!

 

Division of joint property after divorce

Division of joint property after divorce

Along with the divorce hearing, a division of property arises. In most cases, the property becomes the property of the spouse who has received the right to care for the children. If the property is encumbered with a mortgage, the court usually indicates who is responsible for paying the debt.

It is also possible to divide the property before a notary. In the notarial deed, the parties may indicate which of the ex-spouses will be required to repay the loan. However, you should be aware that the division of property before divorce will not affect the obligation for both spouses to repay the loan.

Important – the court cannot divide the debt when dividing property. Although it has the right to indicate who is to repay the loan after divorce, it does not affect the situation when the indicated person stops paying the installments.

 

Property separation and credit

Property separation and credit

The division of joint property can be done in a situation:

  1. divorce
  2. separation
  3. When the spouses conclude the property separation agreement
  4. Court rulings establishing property separation

The loan taken out before signing the intercourse is paid by the spouses jointly. However, after the division of property, the person who incurred the debt repays the debt. The mortgage is not subject to property separation. Therefore, despite divorce, borrowers are jointly responsible for settling the liability.

The solution to the problem may be to cash the laden property. Before the transaction it is worth checking the amount of commission on early repayment of the loan. It is worth noting that in the case of franchisees the amount of the commitment may exceed the value of the purchased house or apartment.

Important – the new mortgage act does not regulate the issue of divorce and the obligation to repay the liability.

 

The ex-spouses are jointly and severally liable for the repayment of the liability

The ex-spouses are jointly and severally liable for the repayment of the liability

Unfortunately, a frequent occurrence is situations where, despite a court ruling on the obligation to repay the loan, the person indicated stops paying the obligation. In such a situation, the bank may demand payment of the debt from the second ex-spouse. This is because formally such a person is still in debt.

Therefore, the bank has the right to use all means to recover the debt. In the worst case, the matter of the outstanding loan may go to a bailiff. The enforcer will be required to seize the property and announce a bailiff auction.

 

Repayment of debt for ex-spouse

Repayment of debt

If one of the ex-spouses stops paying off the loan, the obligation to settle the debt rests on the other. It is possible to recover money if during the divorce hearing a person was appointed responsible for repayment of the liability (also if the person responsible for repayment is appointed by a notarial deed).
You can apply for a refund in court. The basis for recovering money can be the so-called recourse claims.

 

What if one of the spouses dies?

What if one of the spouses dies?

In the event of the death of one of the spouses – borrowers, the property is first inherited by the wife or husband of the deceased. Exception – if the deceased made a will and identified someone else as the heir.
It is good to know that the estate includes both assets and debts. In a situation where the debt exceeds the value of the inheritance, the person inheriting may benefit from the benefit of inventory. You can also renounce your inheritance.

In a situation where borrowers got divorced and the bank did not agree to renounce the repayment of the liability, the living ex-spouse has the obligation to repay.

 

Is it profitable to get married to get a loan?

Is it profitable to get married to get a loan?

Not necessarily, because the economic situation of the future borrower is the most important for the bank. Therefore, if a single has a high income, he has the same chance of getting a loan as a married couple. Moreover, when spouses have children, in the eyes of the bank they are “worse” borrowers than a lonely person (assuming they have similar earnings). This is because for the bank the most important criterion is creditworthiness. It is affected by: income, expenses, other obligations, the borrower’s health, etc. Persons who decide to take out a mortgage on their own should consider insuring their liabilities.

Interestingly, banks grant mortgages to people who are not in formal relationships. It is possible to combine the income of several people in one loan. What’s more, there is no expulsion of kinship or subsequent joint ownership of the purchased property. As in the case of divorce, borrowers are jointly and severally liable for repayment of the obligation.

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