To walk or not to walk, that is the question...

[iknowzalot]

Divorced in Jan '07. Decree states I am responsible for the payment of 1st and 2nd on the house as I stayed in the house. Ex-wife moves to another state and files CH7 in Oct '08, including the house she no longer lives in or pays for. Her name was still on title and note. Guess she needed the debt of the house for her CH7. Is that legal? Ex-wive's CH7 bk is discharged April '09. Loan is transferred to bank2, a debt collector, from bank1. I have been paying bank1/bank2 since the day bank1 stopped sending the email notice to pay the note. Haven't missed a day. Never did a thing with the title. Ex-wife is coming back threatening legal action saying I need to buy her out for 1/2 the equity. House needs a lot of work including foundation. Not putting anymore $$$ into the house. Realtor said I can sell to an investor. The loan is discharged, just called bank2. My credit score just jumped to 800 in June as all her late payments and CH7 bk , my name still tied to, just fell off credit report. If the loan is discharged, and I walk away, what, if anything hits my credit? I have already fought thru 8 years of bad credit because of her CH7 and late car payments. Always broke even, bad luck, on buying and selling previous houses, so no real loss there. Anyone with similar experience? Thoughts? Lots of things I will do next time, but would like some feedback on current situation. Thanks, Not Quite Shakespeare

[LadyInTheRed]

So, if I understand, the following are the facts:

Both you and your ex are on title to the home.
Both you and your wife are on the mortgages.
Your wife filed Chapter 7.
You have not filed bankruptcy.
The divorce decree allowed you to stay in the home and ordered you to pay the mortgage. You have kept the mortgage current ever since.

Please correct anything that is not accurate.

One question: Did the divorce decree give you ownership of the home, or did your ex retain an interest with you required to buy her interest or pay her off when you sell? Her rights depend on what is in the divorce decree, not what is on the deed.

Her BK is not what ruined your credit. It is the default on your joint debts that ruined your credit. A BK can only ruin your credit if you filed BK. If creditors reported otherwise, that could have been disputed. If a BK was reported on your credit report, it sounds like it has dropped of and is no longer an issue.

Only her obligation to pay the mortgage was discharged in her bankruptcy. That does not affect your obligation to pay.

Even though your ex's obligation on the mortgage was discharged, that doesn't effect whether she has an ownership interest in the home. That depends of the terms of your divorce.

It is hard to say how a foreclosure will effect your credit. It sounds like the lenders may be acting as if your obligation is discharged. That doesn't mean they won't realize their error. If you default, that very well may show up on your report, as would a foreclosure. It is impossible to know what the lender will do.

If there is equity in your home and you don't want to stay there, selling it seems to be your best move.