Ex-Spouse Bankruptcy

I have a question regarding a situation I’m finding myself associated with.

My ex-wife and I divorced back in December of 2009. As part of the divorce decree, she kept one of our houses, but I was still obligated to pay the mortgage and that arrangement continues today.

The loan itself has her as the borrower and myself as the co-borrower.

In the past several weeks, members of my family have been receiving calls from debt collection agencies trying to reach my ex-wife.

Thinking of potential outcomes to her financial issues… if she were to declare bankruptcy and someone takes the house from her… could it potentially impact me as the co-borrower? I know people are always hesitant to be cosigners on loans in case the primary defaults on the loan… but I’ve been making on-time payments the entire length of the mortgage. Regardless, they’ll still see it as an asset for her.

Any thoughts or input you might have would be greatly appreciated.

Yes it will impact you as the co borrower since she will default unless you pay her portion. As the co borrower, you have liability in case she doesn’t make her payments. This is regardless of any court decree where she pays her half. The bank will still come after all borrowers to make themselves whole. If debt collectors are calling then that possibly means she is behind on her payments. As the co borrower this means it will be on your credit report.

If she is thinking of going this route, then encourage you to talk to her about conducting a legal remedy such as a short sale.

Try to avoid bankruptcy or foreclosure at all costs.
Above is based on a limited understanding of your situation. Recommend you self report this problem to your FSO.

I appreciate the feedback. I guess to clarify…

It’s her loan, yes, but the first of every month, I log in to the mortgage account and make the payment from my bank account.

My concern isn’t the mortgage payment. I’m paying the entirety. My concern is if shes having money problems elsewhere and decides to file bankruptcy, can the court seize her house that I am paying on and jack up my situation, potentially blemishing my credit even though the house has no delinquent payments.

I guess I am confused. If you are paying the payments, then whether she performs a bankruptcy or not and whether the house can be seized is outside of the concern for a website about security clearances. Did I miss something?

She can perform all the bankruptcies she wants. It won’t affect your clearance since you aren’t married anymore.