After a Rockland County divorce, many people find themselves struggling with debt and the aftermath of their decision for years to come. One of the biggest concerns many people have comes after they choose to file a Chapter 7 bankruptcy petition, especially if they have also held a mortgage in the past with their former spouse.
It’s not unusual for one spouse to sign over rights to a deed during a divorce. This does not automatically let him or her off the hook when it comes to paying the debt, even if a divorce decree specifies a responsible party. The lender can ultimately hold both parties responsible for payment; however, the individual who no longer has an interest in the property does have some leverage at recouping his or her loss. That individual can use a Chapter 7 bankruptcy petition in order to find relief.
It’s possible to file bankruptcy on a mortgage that was taken out with a former spouse without involving that person. If the debt is discharged in bankruptcy court, the petitioner will no longer be responsible for paying any share of delinquent mortgage payments. Even so, his or her name will remain on the note until it is either refinanced, sold or paid in full.
Filing for bankruptcy can often be a confusing process. Those considering filing for bankruptcy may decide to make use of an experienced bankruptcy lawyer. A lawyer may be able to help them to understand their options in the legal process.
Source: Fox Business, “How Does Divorce Affect Bankruptcy and Mortgage?“, Justin Harelik, July 03, 2013by