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Divorce, bankruptcy and home loans

When a couple jointly owns property in Florida, they are both responsible to make the payments on it. For a variety of reasons, they might not be able to keep up with the mortgage, which eventually results inforeclosure and eviction. If they later divorce, and one spouse files for bankruptcy, the other partner can be held financially liable for the residence even after years and years.

Before a bankruptcy, the mortgage company will hold each party 100 percent liable. However, the bankruptcy frees the spouse from any responsibility to pay for the property. While the other spouse may have avoided bankruptcy, they now need to make payments on the debt. If the ex-spouse hadn't filed bankruptcy, the other spouse could try to pursue a financial settlement from them. Once they file bankruptcy, that is no longer an option.

Because the other spouse waited to address the issue, the balance kept increasing. Now they need to pay the new amount. If they ignore the delinquent mortgage, it won't go away. Both names might still be on a lawsuit even if a creditor can't legally get the money from the ex. A judgment against them will stay on their record for 10 years. At the end of the decade, the creditor can ask for another 10-year renewal of the judgment. The creditor can keep repeating renewal requests indefinitely, which will keep the judgment in force. They should try to work out some type of payment arrangement with the creditor or face possible holds on bank accounts or the garnishment of wages.

A divorce sometimes causes a domino effect in a couple's finances. A bankruptcy lawyer might be able to help someone seek financial protection after the break-up of a marriage.

Source: Fox Business, "Ex filed bankruptcy -- is mortgage all on me?", Justin Harelik, November 26, 2013

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