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Bankruptcy can leave ex-spouses with mortgage woes

For Maryland residents who have gone through a divorce, a question often remains about what to do with the family home. In many instances, one of the spouses simply keeps the home, and both parties remain on the mortgage documents. This is a dangerous situation for some spouses, though, as their exes may be facing overwhelming debt that leads them to file for personal bankruptcy. Spouses who are still named on home loans even after they are divorced can be held liable for the entirety of a mortgage if their ex declares personal bankruptcy.

Say, for example, that your ex has been living in your home after the divorce, but you never bothered to have your name taken off of the mortgage. If that individual files for bankruptcy and discharges all debts, the bank will now turn to you for full payment on the loan. If the ex had not filed for bankruptcy, you may have been able to recover half of the payment amount, but that option is now unavailable.

So, what are your options if you find yourself stuck with a home loan after your ex declares bankruptcy? First, you can settle the debt in a lump sum. You can also negotiate with the creditor for a set-up that includes more manageable payments. Finally, you may consider filing for individual bankruptcy yourself, in order to avoid the financial challenges that come along with the new monetary responsibilities.

In such a situation, it is important to quickly decide whether you intend to pursue bankruptcy, as creditors can begin to take legal action against you almost immediately. Not only can the creditors seek legal power to levy the contents of your bank accounts, but they can also garnish your wages. Experts advise against hiding from such a problem; instead, it is helpful to immediately obtain the advice of a qualified bankruptcy attorney. These Maryland professionals can answer your legal questions and start you on the road to financial recovery, even after such an unexpected change.

Source: www.foxbusiness.com, "Ex filed bankruptcy - is mortgage all on me?" Justin Harelik, Nov. 26, 2013

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