Some Colorado couples may mistakenly believe that when they end their marriage, they are also ending their joint financial commitments. Any debt or assets that were in a person's name when they were married are still seen as belonging to both parties after a divorce. This can cause significant problems with a person's credit score and debt-to-income ratio, especially where a house is concerned if a couple does not sell it.
It might be logical to think that if people get divorced and one of them moves out of a home that they are no longer responsible for it. However, this is not the case from a lender's perspective. The only way to protect one's credit if an ex misses a mortgage payment is to get one's name off the loan. This can be accomplished by refinancing and putting only the person's name who is living in the home on the mortgage. If an ex does not qualify for a new mortgage, then selling the home is a solution.
Refinancing to get someone's name off the loan might be the only way that person can qualify for a new loan as well. Even if a divorce decree awards a house to someone's ex, a lender is still going to consider the debt of that home when deciding whether to give someone a loan for a new house. Something else to be wary of is buying a new home while still married because spouses will have a legal interest in the new home. If one cannot wait until a divorce is finalized, he or she should ask their ex to sign a quit claim deed to release interest in the new house.
One of the difficult parts of property division is figuring out what everything is worth and which assets someone may be entitled to. A family law attorney may be able to assist with valuation and help resolve any property division issues.
Source: Credit.com, "How to Divide Your House in a Divorce", Scott Sheldon, July 09, 2014