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What Happens to a Mortgage During a Divorce?

If you are filing for divorce, you will need to decide how to split custody if you have children, calculate potential child support or alimony payments, and allocate your assets in an equitable manner. These assets may include bank accounts, retirement funds, and any properties you own—and if you have a mortgage, this division can become very complicated.

Indiana Is an Equitable Property Division State

There are two types of property you may encounter during a divorce. Marital property is owned by you and your spouse and subject to division during a divorce. Separate property is property that you or your spouse owns before marriage and is generally not subject to division.

When a couple gets married in Indiana, their separate property often becomes marital property. For example, if you own a house before marriage and you and your spouse share mortgage payments after you get married, it becomes marital property.

Indiana follows an equitable property distribution standard when deciding how to divide assets during a divorce. This means that the court will examine each piece of property and determine how to divide it in a fair manner. Usually, the court will divide the property equally between you and your spouse. However, there are some situations where an unequal split is more appropriate.

The court may examine the following factors when determining how to divide property in an equitable manner.

  • Who owned the property prior to marriage
  • Each spouse’s contributions to acquiring the property
  • The financial circumstances of each spouse
  • The earning ability or income of each spouse
  • Whether the couple has children and who has primary custody
  • How each spouse treated the property or asset

Mortgages and Indiana Divorces

When it comes to mortgages, the court will choose a spouse to be primarily responsible for making the loan payments. In some cases, allocating a mortgage after a divorce is relatively simple. For example, say that the mortgage is in your spouse’s name and he or she is the only person who makes payments on it. Since you did not make any contributions to it and did not have a major hand in the property’s acquisition, the court will allocate the loan to your spouse.

However, you and your spouse may have had a joint mortgage and shared financial responsibility. In these situations, the court may assign one spouse to make the payments. Although your divorce decree may outline these responsibilities, your provider will continue to hold you financially responsible for the mortgage if your name is on the loan.

Even if the court determines that your spouse is the person who should take over your mortgage payments, your credit could be harmed if your spouse defaults or misses a payment. You may request that the lender take the non-paying spouse’s name off of the mortgage, but not all providers will honor this request. In these situations, it is best for the spouse who is responsible for paying the mortgage to either sell the property or refinance the mortgage.

Contact an Indianapolis Divorce Lawyer

Divorce can have a major impact on your finances, especially if you and your spouse share mortgages, credit cards, and other loan accounts. In these situations, you need an Indianapolis divorce lawyer who can help you navigate the asset division process and understand how each decision may impact your financial future. Contact an Indiana divorce lawyer as soon as possible to discuss your path forward.