FICO Credit Score Trumps Divorce Judge in California, too!

The blog post below also applies in our areas of Temecula, Murrieta, Oceanside, etc. in California.  Parties to a divorce need to look into the implications of anything the judge in their divorce case decrees: simply saying one party has to take over the mortgage or credit card payments doesn't fix the foreseeable situation where that party stops paying - for whatever the reason: pay cut, job loss, illness, spite or whatever.  

I have it in writing.  The judge decided my ex was responsible for those debts.  The bum didn’t pay and FICO lowers MY credit score.  Why?  I just don’t get it.

Katherine was totally blindsided when her FICO credit score took an unexpected beating.  Her ex didn’t make payments the divorce court decreed he had to make.  The initial shock gave way to rage and then a feeling of complete helplessness.

-- Blindsided because she believed the judge presiding over her divorce had the legal power to decide who got what and who paid what.

-- Rage because Thurman did it again.  She thought he was out of her life for good, but here he was messing with her life once again.

-- Complete helplessness overcame her when she found out she couldn’t do anything about it.  Thurman had won again – he found a way to overrule the judge.

Katherine recommends her divorce attorney – she recommends he be hung by his privates in the public square.  How could he let Thurman’s lawyer talk her into allowing her ex take over the mortgage payment and credit card debt.  It sounded too good to be true.  And it was.

-- Foreclosure was right around the corner.  Not only did her FICO score plummet, Katherine and her two children would become homeless.  This meant moving in with mom.  How embarrassing.  Mom would remind her at least daily that she had warned her not to marry Thurman.  Unbearable.

-- Credit card companies were hounding her for payment.  They threatened to take HER to court.  FICO scores just keep dropping.

Why was this happening?  A legal contract was created when Katherine and Thurman financed their home and acquired joint credit cards.  A divorce judge cannot cancel these legal contracts.  What can be done?

-- Katherine can’t change the past.  She’s stuck with cleaning up Thurman’s mess.  Should she file for bankruptcy?  She dreaded talking to another lawyer.

-- Keep debt separate from the start.  A preventative step chosen by some newlyweds.  This is not absolute – some co-mingling will occur.  Mortgages are one instance.

-- Pay off or refinance debt during divorce.  Responsibility for new debt needs to match divorce decree.  When divorce judge says Thurman must pay credit card debt, Thurman needs to pay off debt or get loan in his name to pay off credit card debt.

Finding your one true love, staying together for life and both living with financial responsibility works well.  Sometimes life has other plans.  Take care of yourself.

Kathy Godin, Award-Winning Loan Officer and Branch Manager
CrossCountry Mortgage Inc.
(919) 789-9888
Where people, not computer robots, answer the phone.
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Lisa Delzompo (951-704-4559)

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Comment balloon 3 commentsLisa Delzompo 951-704-4559 • July 24 2012 08:06AM

Comments

Lisa, the only thing that matters here is that the wife is still responsible for the loan payment... regardless of whether the ex is ordered to pay it.  Perhaps he can be held in contempt, or charged with violating a court order... but the lender ould care less.  If the wife agreed to repay the loan originally... the divorce does not change that as far as the original loan is concerned.

It is very similar to the old "assumable" VA loans.  Unless the lender releases the original borrower from responsibilty, she is... still responsible.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 6 years ago

Hi Karen, yes, that's what the divorcee' needs to realize: they are still liable for a loan they contracted for years ago, unless something is done directly with the lender or credit card company such as refinance that spouse's name off the loan, pay off the credit card, etc.  

Posted by Lisa Delzompo 951-704-4559, Experienced, Trusted, & On Your Mission: Home (PRW Lending, Inc) over 6 years ago

Lisa:  Exactly.  On the post that you re-blogged... there is a lot of "carping" about how the Credit Bureaus need to follow the court's order and take the woman off the loan. 

How these agents can be in business for as long as some of them have, and not know that only the original lender can remove the wife from responsibility for the loan, is beyond me.  And... for as long as I can remember, I cannot recall any lender doing that.

Ordering someone to make the payments... and being relieved of liability for that payment... are two totally unconnected things.  Really... the only way off the loan, is to get the loan paid off... and have the other person refinance it in his name only.

By the way... I have just subscribed to your blog.  I invite you to subscribe to mine.   :)

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 6 years ago

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