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  1. #1
    Join Date
    Feb 2013
    Posts
    4

    Default Bankruptcy and Joint Mortgage Accounts

    My question involves bankruptcy in the state of: pennsylvania.

    My husband and I both have bad debt. We do not have any debts together since most of are bad credit is from before we met. There is a situation with my husband that we're trying to get some information on. He was married once before me and owned a home with his ex wife. He moved out of the house in 2005 and has not made any payments towards it since then. He is still listed on the deed and the mortgage loan and the loan is current and in good standing. With that being said, we'd like to file joint bankrupcty and have this account removed from his credit report. He wants off this account and she doesn't qualify for a refi on her own. The whole reason we want to file bankruptcy is so that way we can start over and take the steps we need to take to establish good credit again and obtain our own mortgage loan. We were told by a mortgage specialist that even if we both had good credit we can not qualify for a loan with him already having a mortgage loan, regardless of if he lives there or not. So my question when we file bankruptcy can we 1)file jointly even though none of our bad debt is jointly owned together, 2)can he include his mortgage loan on the bankruptcy even though it's current and in good standing, and 3)if he can include it will the bankruptcy remove him from the mortgage account? Any info would be greatly appreciated!

  2. #2
    Join Date
    Sep 2010
    Posts
    478

    Default Re: Bankruptcy and Joint Mortgage Accounts

    1) Can we file jointly even though none of our bad debt is jointly owned together?
    Yes.

    2) Can he include his mortgage loan on the bankruptcy even though it's current and in good standing?
    Yes, and he has to since all creditors and all assets must be listed.

    3) If he can include it will the bankruptcy remove him from the mortgage account?
    He will no longer be liable on the loan. While technically not “removed” from the account the creditor will be “enjoined” from trying to collect anything. The creditor may report the account as “included in bankruptcy” and will not look to your husband for payment.

    Des.

  3. #3
    Join Date
    Feb 2013
    Posts
    4

    Default Re: Bankruptcy and Joint Mortgage Accounts

    Thank you for the information. I would just like to clarify a few things? You said the mortgage account will show as included in bankruptcy but once the bankruptcy is old and the statute of limitions have run out then ALL the accounts that show as part of our bankruptcy will no longer be on our credit report....including this mortgage loan? Meaning that once we start to establish good credit again and apply for our own mortgage loan this current mortgage loan won't prevent us from qualifing based on our debt to income ratio because he's not longer liable for the debt? Also, will this effect the ex wife's credit or standing with the mortgage company?

  4. #4
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Bankruptcy and Joint Mortgage Accounts

    Quote Quoting Angie.Grube
    View Post
    Thank you for the information. I would just like to clarify a few things? You said the mortgage account will show as included in bankruptcy but once the bankruptcy is old and the statute of limitions have run out then ALL the accounts that show as part of our bankruptcy will no longer be on our credit report....including this mortgage loan? Meaning that once we start to establish good credit again and apply for our own mortgage loan this current mortgage loan won't prevent us from qualifing based on our debt to income ratio because he's not longer liable for the debt? Also, will this effect the ex wife's credit or standing with the mortgage company?
    The one potential problem I can see in this is that if the home has any equity, and your husband's name is still on the deed, then the trustee for the bankruptcy could attempt to seize the equity in the home to pay the creditors, which would put your husband in violation/contempt of the divorce decree. That exact scenario arose on either this forum or another one I participate on just recently (cannot remember which).

    So, you are going to have to be very careful about that. Either the ex is going to need to find some way to finance to remove him from both the loan and the deed (perhaps with a co-signer) or your husband is going to have to find a way to be removed from just the deed, before the bankruptcy, and enough time before he files bankruptcy that the trustee cannot go back and try to seize any equity in the home. I don't know how long that time frame would be, but I am sure that a local bankruptcy attorney could tell you.

  5. #5
    Join Date
    Feb 2013
    Posts
    4

    Default Re: Bankruptcy and Joint Mortgage Accounts

    We checked his divorce decree and it says that she resides in the house. The decree is pretty general because when he first filed in 2005 she contested so he had to wait 2 years to finalize. At that time she didn't respond to any attempts at all to sign the papers so what should have taken a few months ended up taking forever because his attorney had to find a way around her signature. As a result, the decree is pretty simple and to the point. I'm really not sure what's going to happen but one way or another he has to get his named removed. I would like to be able to purchase a home with my family in the future and there's no way I can ever do that if he's liable for this debt. We're meeting with an attorney next week to see what we can do about this. Thanks for the information, we'll be sure to take his decree along so our attorney can review it.

  6. #6
    Join Date
    Mar 2013
    Posts
    1

    Default Re: Bankruptcy and Joint Mortgage Accounts

    Thanks for the replies too, I was wondering the same thing.

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