Articles Tagged with divorce

By Alfred Villoch, III, with Savage, Combs & Villoch, PLLC

Divorce is often the catalyst for bankruptcy.  After divorce, finances are stretched. There are new budgetary constraints.  One partner might lose health insurance or the insurance might become more costly for the ex-spouse.  Alimony and child support become additional expenses to pay.  Some start having to pay new expenses such as child care, and others will find their expenses increased because no longer are they splitting bills and living expenses with their former partner.

A particular trigger for bankruptcy is the former marital home and the mortgage. When a married couple owns a house, typically one spouse keeps possession and the other spouse will agree to make or help out with the mortgage payments.  Unless the couple refinances the mortgage, both partners will remain legally responsible for the mortgage debt.  The problem arises when, for whatever reason, the mortgage goes unpaid and falls into default.  This drags the co-obligor – who doesn’t even live in the home – into a foreclosure lawsuit and starts to severely damage that person’s credit score.  One spouse can file for bankruptcy, leaving the other spouse adrift and fully responsible for the mortgage.