When Colorado couples make the decision to divorce, there are a number of critical legal issues that must be settled in order to move into the next phase of life. In addition to family matters such as child custody, many divorcing couples have to decide what they will do with their house.
Determining what happens to the family home can often be a point of contention in divorce. Both spouses may have emotional attachments to the house and may not be able to agree on who should keep it, but what they may overlook in this process is who will take responsibility for the mortgage. Just as divorcing couples split their assets, they also divide their debts.
Depending on the terms of the divorce settlement, one spouse may receive the house and the other may become responsible for the mortgage. Otherwise, the couple may determine that it's best to share the payments. Whatever the case, it's important to make sure that the names on the mortgage are accurate. If only one spouse is responsible for the mortgage and both names are left on the documents, a late payment could prove detrimental for both parties.
This is why final settlements should include considerations to make sure the mortgage is handled correctly. Unfortunately, removing one person's name from a mortgage is not the easiest task. Divorce alone will not allow a person to remove their name, but refinancing is one way to make that happen. As such, a divorce settlement can provide the opportunity for the spouse who is taking charge of the mortgage to refinance once the split is completed.
Most finance-related issues in divorce are complicated. However, if couples make an effort to remain civil and try to remove excess emotions, it may be possible to reach a mutually agreeable settlement.
Source: Summit Daily, "Financial Facts: How divorce affects your mortgage," Bob Kieber, April 13, 2013
Our firm has experience handling complex property division issues. To find out more, please see our Fort Collins divorce page.