During a separation are both parties responsible for paying a home equity loan that has both names on it?

The short answer is “Yes”. If your home equity loan has your name on it…you are responsible.

The long answer is if your court approved separation agreement states one party is responsible, well then..they are.

However, don’t get confused. The court doesn’t dictate to the credit bureaus how to do their job. If the “responsible party” from the separation / divorce agreement stops paying or pays late on a credit obligation that still retains both parties’ names…both parties’ credit will get hurt.

If you are concerned about preserving your credit through divorce, you should make it part of your separation / divorce agreement to refinance all debts only in the name of the responsible party. Extinguish all joint debts if need be to accomplish this.

Our ebook “Home Custody” goes into great detail on preserving your credit and the ability to buy a new home through divorce.

Great question!

Author: The Mortgage Insider

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