We live in a time when hardly anyone can afford to buy a flat for cash, and 1/3 of marriages end in divorce. The problem of credit after divorce is a growing problem.
Only when we only have credit with our ex-husband or wife do we start to think about how to disentangle ourselves from our mutual obligations.
In the event of divorce
It is very common for spouses to come to a notary and share their property. Usually one of the people takes the house, the other movable. However, they forget to secure the bank while concluding a joint loan, in particular a mortgage. The contract with the bank is a civil contract, and therefore the bank’s ex-spouses are still jointly responsible for paying off the debt.
If you do not check in the bank beforehand what will happen after the transfer of ownership to one person, you may still be required to repay the loan. As a result, we may find ourselves in a situation that we will no longer own the property, and will still be obliged to repay the loan. Not only that, without creditworthiness, we will not be able to buy a new apartment and we will be forced to rent.
The simplest solution would be to sell the property and divide the money between the spouses.
What if one wants to live still at home? If there is a conflict between the spouses, in order to be able to make another move, either there must be a divorce and the court will also decide on the division of joint property, or there must be separation of property, i.e. the spouses must go to a notary and sign a contract regulating the division of property.
Alternatively, there is a third option – if the divorce case lasts a long time, you can go to court so that he can decide on the separation. However, sales by court decision are detrimental to both parties. It is better for us to apply for a flat. If the court decides to sell, it will be carried out by bailiff.
Who should pay back the loan after divorce?
For obvious reasons, the loan should be repaid by the partner who keeps the property. For this to happen, we must go to the bank and negotiate an annex to the contract or conclude a completely new contract. Until we do this, we are jointly and severally liable to the bank, and the bank may choose which of the spouses to submit the claim.
In an extreme situation, the spouse keeping the flat may not repay the loan, and the former partner deprived of the right to use e.g. real estate will be forced to pay the installments. Unfortunately, banks are reluctant to rewrite only one of the parties. It is in the bank’s interest that two people be responsible for it, because it is more secure. So the best solution is for one partner to pay off the other.