Divorce Support Forums: She lies

a couple ways to fix this. Make her take out a new loan and get your mother's name off it. OR you take $20K more worth of property from the marriage and take on the debt for her to make certain it gets paid off.

When couples have more debt than assets and can not do it the second way, and the credit rating is bad enough that it's impossible to re-finance loans into one name alone, then you have no real choice but to put it into the documents that she is supposed to indemnify your mother against it and promise to maintain payments on it... and then hope that she does because if your mother has to chase after her to enforce your decree it's going to be nearly impossible.

Luckily, this is just a small loan. Many companies will finance just $20,000 for a person who has an education and job prospects... which is how we get car loans when the minute we drive the car off the lot it'll be worth a lot less than the loan... the banks don't mind making what they think of as smaller loans like this. Heck, for someone with a new degree, they may just be willing to hand her a credit card with a limit of close to the amount of the loan, so it's QUITE possible that she might be able to re-finance.

Now, what's more likely is you'll need a combination of things... like you keep the more valuable car (with it's loan) and the bank account and all the furniture, and that gets you $10,000 worth of extra stuff so it covers half of the price of the loan, and then you take the whole loan and make her pay you an equalizing payment of $10,000 cash. It's a whole lot easier to come up with a personal loan of $10,000 in cash just to get a divorce over with... so if you work it right, that might happen.

I just met someone at a business mixer who was talking about how she was taking the loan over for the house in exchange for him paying more in alimony... He had apparently taken out a home equity loan and used the money on his own things that HE was getting in the divorce, and with the economy now, the house SHE is getting in the divorce is worth about $50,000 less than the price of the loans on it. So he agreed to pay off the loan. Well, that doesn't work for her because he's unreliable. But then he didn't want to trust that SHE was paying off that loan either. He was afraid she'd abandon the house to foreclosure and take his alimony to go have fun. So here's how they worked it. He pays her alimony every month and she sends a receipt to him that she paid off that loan to keep both thier credits clean. This way, she doesn't have to trust him. He doesn't have to trust her. And they'are all that the loan is being paid off.

Much better to refinance if you can and get one or the other name off of it, or to pay it off altogether... even if the interest rate is low and you'd rather keep the loan than pay for it (because the trouble of making each other accountable for it over the years and keeping your credit rating out of the toilet is worth the price fo paying off a cheap loan early)... but if you can't, then don't rely upon the lender letting you know if the other person didn't pay up... that usually only happens after half a year of missed payments, the loan is in collections, and your credit rating is already ruined!

If both people are going to keep a loan that's in both names, much better to make it a requirement for one of the people to prove to the other, every month, that they've paid the loan.

I know to people who are just trying to figure out something like this, it's easier to think, "oh, I'll just give you a receipt every month... that'll be easier than trying to re-finance it"... and just to get an agreement you say "yes, sure, no problem". BUT think about what's going to happen 5-10 years from now when you've lost track of each other and the loan is not being paid. Think what's going to happen 4 months after the divorce is final when she skips a payment and claims she needed the money for utilities... is your Mom going to really want to have to pursue her for that every time she does such stuff? Do you ahve anything built into the decree that will punish her for failing to maintain the loan?

MUCH better to take over the loan or pay it off if you can. Better to start from scratch with no savings (and no outstanding loans) if you can, than to keep your credit ratings tied to each other for years after this is over with.