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Divorce and the marital home

Pennsylvania residents who relinquished their house during the property division phase of their divorce proceedings may want to be prepared for the credit issues they could face as a result. Although a judge may have awarded one spouse the marital home, the other spouse will still be tied to the unpaid debt in the eyes of the mortgage lender.

When an ex-spouse looks up their credit report after a divorce, the report will still include the mortgage for their marital home even if they no longer own the home. This piece of information could significantly impact a person's debt-to-income ratio and affect their ability to secure future loans. To make matters worse, a person in this situation could watch their credit score decline as a direct result of their ex-spouse's failure to keep up with mortgage payments in the future.

Divorce issues like these can be avoided if the ex-spouse who is awarded the marital home in a divorce settlement either sells the home or refinances the mortgage. If the homeowner chooses to refinance the mortgage on the marital home, they would take their ex-spouse's name off of the mortgage. The ex-spouse who was not awarded the marital home would then be released from any liability for unpaid debt.

With the help of an attorney, an individual who is going through a divorce may be able to avoid credit issues from a shared mortgage and other unforeseen financial problems that could arise. An attorney may be able to help a divorcing spouse by ensuring that the settlement agreement is well constructed and takes all potential liabilities into account.

Source: Credit.com, "How to divide your house in a divorce ", Scott Sheldon , December 04, 2014

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