You and your ex got married back in 2005. Three years later, you bought a house together. By 2015, you were talking about divorce. You finalized it last year. The marriage is over.
During the divorce process, your ex said that they wanted to keep the house. They agreed to keep making those monthly mortgage payments. You wanted to move anyway, so you said it was fine. The value of the house also gave you a way to take more of the money the two of you had saved for retirement, which you wanted more anyway.
It feels like you reached a perfect solution for both of you. But is the whole thing going to blow up in your face?
Your divorce agreement officially ends your marriage. As you split up, you can agree to anything that you want, from the way you want to divide assets to what you plan to do with the debt from your marriage. In your case, your spouse agreed to pay.
But that is not the lender's agreement. They never signed off on it. If your spouse doesn't pay, then what?
The reality is that you may still be bound by the original terms. When you and your ex applied for the mortgage, you did it together. It's a joint loan. Getting divorced does not change that obligation.
What this means is that the lenders could very well come after you if your ex stops paying and cuts off communication with them. As far as they are concerned, you're just as responsible to pay that money back as your ex is. They don't give any thought to your marital status. You both agreed to pay initially, and they expect one of you to pay.
A real separation of debt
For this reason, many financial experts do not advise separating debt in this fashion. Even the best of intentions do not always work out. What if your ex faces serious financial trouble or bankruptcy? What if they get fired or get sick? What if they can't work anymore? There are just so many factors that you have to consider. Your ex may not pay.
A real separation of debt means having your spouse refinance that loan. They can apply for a loan for the value of the house, doing it on their own. If they get it, they can then buy the house from you. By doing this, they take on the full responsibility and the joint loan with your name on it gets paid off. This way, you have no obligation if they fail to pay.
As you can see, it is very important to understand exactly what legal obligations you have under your divorce agreement. It may not be as clear as you assumed.