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Loans unaddressed by divorce agreement create financial risks

Loans unaddressed by divorce agreement create financial risks

Someone in the middle of negotiating a divorce agreement in Virginia should be careful to avoid leaving any loose ends hanging, especially loans or a home mortgage. Consider the scenario of two divorced people in which the ex-husband continues to pay the mortgage that still has the ex-wife’s name on it. Although she lives elsewhere, she remains financially vulnerable in at least two ways.

If the ex-husband stops making payments because of financial hardship or spite, then the ex-wife would have her credit rating harmed. Even if he continues to pay the mortgage, her ability to buy a different home could be undermined because of her existing debt obligation.


Lenders generally are not receptive to requests to simply remove someone’s name from a loan. To achieve freedom from a loan incurred during the marriage, a person would have to specifically address the issue during the divorce. The person who will keep the home would typically need to agree to refinance the property under a single name. If refinancing is not possible or desired, then the home should be sold, the mortgage paid off and the remaining assets, if any, distributed between the ex-spouses.

To avoid or limit undesirable financial consequences after a divorce, a person could have an attorney prepare the divorce agreement. Along with making recommendations about how to divide property, an attorney could engage the other party in negotiations and buffer the person from unpleasant conversations and hostility. The efforts of an attorney might be especially beneficial in a high-net-worth divorce. An attorney could interpret the terms of a prenuptial agreement, if one is present, and represent the client in court when final decisions are being determined about the terms of the divorce.