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Havingfunwiththex
Posts: 1
Registered: ‎12-06-2012
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Bankruptcy on a mortgage of a co borrower (ex spouse) who has quit claim on the property

I quit claimed my home to my ex wife and she now wants to short sell the property. I am a primary borrower on the loan and I want her to quit claim it back to me so it will not mess up my credit but she will not unless i can get her name off the loan. I can not refinance it at this time and Chase will not release her from the liability.  I'm thinking maybe she can file bankruptcy even though there will be no amount of debt because i will have to take over the debt. She has a car loan and one cedi can totaling about $9000 and she would reaffirm those debts. Her score is 770. The question, what will happen to her credit if she files bankruptcy on the mortgage (even though there will be no amount and will reaffirm her car loan and credit card payment)? Or does anyone have any better options? Thanks  

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chasmith
Posts: 1,062
Registered: ‎05-26-2010
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Re: Bankruptcy on a mortgage of a co borrower (ex spouse) who has quit claim on the property

Quit claiming has really no impact on the debt.  Chase has two borrowers on the hook and if one files BK they will continue to pursue the other.  This is a common situation in divorce because while the divorce decree may say one party is responsible to pay the debt and hold the other harmless, that has no impact on the note / liability.  If she lets the mortgage go into default your only recourse is to sue her for violating the divorce decree. In the end, that mortgage is encumbering each of you from refinancing.  I gather the home is currently "under water" thus the short sale.

 

You want her to quit claim back to you but that won't affect her liability.  I gather you would keep keep the mortgage current and wish to then own the house .  That would be good for her except if you let the mortgage go into default it will impact her credit and she will be liable.  The deed has no relationship to the loan except that you might trogger a "due on sale" acceleration by retitling the house.

 

You need to consult your divorce lawyer and/or a real estate lawyer.  You might be able to do some sort of trust arrangement where the transfer to sole ownership by you is held in trust until you have made all payments current until refinanced out of her name.  That's the best she's going to get.

 

BK7 Filed 8/11/2009 Discharged 11/23/2009. Purchased new home 4/11/2012
Starting Score:11/16/2009 EQ 566 11/16/2009 TU 538
Interim Score: 12/27/2012 EQ 683 09/17/2012 EX (lender) 670 1/01/2013 TU 701
Current Score: 11/06/2013 EQ 708 11/06/2013 EX 702 11/16/2013 702 11/06/2013 TU 729
Goal Score: EQ 740 EX 740 TU 740
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Established Contributor
SoulMaster
Posts: 993
Registered: ‎11-08-2011
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Re: Bankruptcy on a mortgage of a co borrower (ex spouse) who has quit claim on the property

Honestly, if she's willing to do the short-sale and you don't live there anymore; just let it happen.  You'll take a ~90-120 point hit to your score in the short term, about 1/2 of that will come back 12-18mo after the sale is finalized and you could work on goodwilling the TL off your CRs after that time as well.

 

We have to remember, that the ONLY reason to have great credit is to save ourselves money when we buy stuff we can't afford to pay cash for.  So, if you take the hit now, you'll recover a whole lot sooner (and save all the $ you would have to stuff into the payments just to save your credit).  In otherwords, don't let "protecting your score" cost you more money than it will save you if you let that score go down awhile.

 

Also, w/ a short sale, she's going to know that she has to leave and you're not going to have to mess around trying to get her evicted.  So, get your butts into an attorney's office and just rip-off the bandaid so the wound can heal quickly.

 

My 2¢.

 

-SM

I am not an attorney and none of what I write should be construed as legal advice. For legal advice please consult an attorney.

Starting Score: ~470 preBK(8/2010)
Current Scores as of 3/15/14 All 700+. Last CR pull from a lender(housing) was mid-score 729.
Goal Score: 700+ - reached.
Valued Contributor
chasmith
Posts: 1,062
Registered: ‎05-26-2010
0

Re: Bankruptcy on a mortgage of a co borrower (ex spouse) who has quit claim on the property

If I'm reading the initial thread correctly, the bank won't agree to a short sale.  They have two borrowers on the note and are hanging tough.

BK7 Filed 8/11/2009 Discharged 11/23/2009. Purchased new home 4/11/2012
Starting Score:11/16/2009 EQ 566 11/16/2009 TU 538
Interim Score: 12/27/2012 EQ 683 09/17/2012 EX (lender) 670 1/01/2013 TU 701
Current Score: 11/06/2013 EQ 708 11/06/2013 EX 702 11/16/2013 702 11/06/2013 TU 729
Goal Score: EQ 740 EX 740 TU 740
Take the FICO Fitness Challenge
Established Contributor
SoulMaster
Posts: 993
Registered: ‎11-08-2011
0

Re: Bankruptcy on a mortgage of a co borrower (ex spouse) who has quit claim on the property

chasmith- I think you're reading it wrong.  The way I read it is that Chase won't refinance him and won't remove her from the original loan.  From what it sounds like, they haven't listed the property for SS yet, and clearly don't have an offer, so he won't know what the Chase's terms are to complete the SS with a full deficiency waiver.

 

From experience, I can tell you that Chase is one of the best banks to execute a short sale with.  I've seen at least a dozen borrowers getting $20,000 or more in "cash for keys" money from Chase once the SS is finalized.  The highest I've seen from Chase was a $34,000 check on a property that short sold for ~$180K.  Their short sale programs are nuts.

 

-SM

I am not an attorney and none of what I write should be construed as legal advice. For legal advice please consult an attorney.

Starting Score: ~470 preBK(8/2010)
Current Scores as of 3/15/14 All 700+. Last CR pull from a lender(housing) was mid-score 729.
Goal Score: 700+ - reached.
Valued Contributor
IOBA
Posts: 2,659
Registered: ‎08-13-2009
0

Re: Bankruptcy on a mortgage of a co borrower (ex spouse) who has quit claim on the property

If your x is going to file bk basically to get out of the house, encourage her to quit claim deed it back to you and tell her once that is done, you will refinance it in your own name.   If necessary, put it in writing and give yourself up to a year to do it.  Tell her you promise to keep the payments current so her credit is not doomed.


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