No Need to Refinance

Todd took out a loan to cover his ex-wife's credit card debts. She's still on their mortgage and planning to file bankruptcy. Can she file bankruptcy on her portion of it?

QUESTION: Todd in Nashville says his ex-wife was resentful of working Dave’s plan. Todd discovered the reason why was because she’d run up credit card debt. Todd took out a loan to cover it. He came home one day to discover she’d moved out plus accumulated more debt. She’s still on their mortgage and planning to file bankruptcy. Can she file bankruptcy on her portion of it?

ANSWER: The bankruptcy trustee won’t want anything to do with the house. They will abandon the house as an asset. Your mortgage company may ask you to re-sign the note. Probably more than anything, as long as you keep paying the payments, you’ll just never hear anything.

She’ll be off the liability of the mortgage as a result of the bankruptcy. She won’t be liable anymore for it, and it would be great if you could just get her to quitclaim the ownership of the property to you. You don’t have to refinance it. She will be off of it by filing bankruptcy. But she’s not off the ownership. She’s just off the debt. I still want her to give the ownership to you, so have her quitclaim the ownership to you. That shouldn’t be a problem for her because she’s filed bankruptcy or is filing bankruptcy and won’t have any liability on the note anymore. You don’t have to refinance to get her off the note. The bankruptcy does that.

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