The News Dispatch is pleased to announce a new weekly feature. Michael Gowan of Hallmark Home Mortgage here in Michigan City will be here to answer your mortgage and real estate related questions.

Ask Mike

Mike,

I recently went through a nasty divorce and, as part of the property settlement, our joint debts were divided up between us. Afterward, I applied for a mortgage and was denied when they pulled my credit because my score was too low. I asked why this was; I always pay my bills on time. They informed me that I had many late payments on my report. They gave me a copy of the report and all of the late payments were on the debts that had been awarded to my ex-husband. When I informed them of this, they said that it didn't really help because the accounts were still affecting my credit score. How do I fix this?

J. in Trail Creek

Dear J.,

You are, unfortunately, in a not uncommon situation. The problem is, when a couple goes through a divorce, and the attorneys split up the marital debts, and then, eventually, a judge signed the property settlement agreement, everyone involved leaves the proceedings believing that the issues have been resolved.

However, no one throughout this process ever seems to remember to mention that not one of the creditors on any of the joint debts has been consulted, nor are they bound in any way by the decision rendered by the court.

What this boils down to is that, even though some of the debts were awarded to your ex-partner, you are still just as liable for the repayment of those debts as you were the day you signed for them. Also, the credit bureaus to which the creditors are reporting have no way of knowing that there has been any change unless the creditor supplies that information to them.

This is clearly a flaw in the system, both in practice and, primarily, in the disclosure requirements for the legal practitioners involved.

My recommendation is that you contact the creditors involved and either attempt to negotiate a settlement to retire (pay off) the debt, or re-negotiate the entire debt (or a determined portion of the debt) in your name only and begin to repay that portion in a timely manner. However, no matter which of these paths you choose, it is extremely important that you get all agreements in writing and that you follow up with the appropriate credit bureau(s) to ensure that the account is being reported correctly.

Please send your mortgage related questions directly to Mike at
mgowan@hallmarkhomemortgage.com.