Need clarification on legal proceedings

[user2]

What is the name of your state (only U.S. law)? Idaho

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Hello,
I am in the process of divorcing my wife and I have some questions regarding how to file the right papers. This is what I want to do:
1. I want to sign the house over to her. From what I have been reading I think I need to file a quitclaim deed. I found this one here: http://www.courtselfhelp.idaho.gov/documents/docs304/CAO 6-10 Quitclaim Deed.PDF
Is this all I would need so that she would take the house? I also want to make sure that doing this also clears me from the mortgage liability afterwards, is this a separate issue or is it taken care of by the quitclaim deed as well?

2. We both have cars with both of our names on them. Howe do we go about changing that so that her car is under her name only with her being fully responsible for it financially and me being responsible for my car?

3. Credit cards. We got one shared credit card that is paid off but under both of our names. I want to make sure that after I leave if she uses it that I am not responsible for paying any of it.

4. We both have our own 401K but we are keeping our own. Anything that we need to do here?

5. What about taxes? we used to file our taxes together, does that make a difference for next year?

6. Is there anything else that I am overlooking that I should be aware of?

Thanks for any help you folks can provide.

 

[mistoffolees]

What is the name of your state (only U.S. law)? Idaho

--------------------------------------

Hello,
I am in the process of divorcing my wife and I have some questions regarding how to file the right papers. This is what I want to do:
1. I want to sign the house over to her. From what I have been reading I think I need to file a quitclaim deed. I found this one here: http://www.courtselfhelp.idaho.gov/documents/docs304/CAO 6-10 Quitclaim Deed.PDF
Is this all I would need so that she would take the house? I also want to make sure that doing this also clears me from the mortgage liability afterwards, is this a separate issue or is it taken care of by the quitclaim deed as well?

2. We both have cars with both of our names on them. Howe do we go about changing that so that her car is under her name only with her being fully responsible for it financially and me being responsible for my car?

3. Credit cards. We got one shared credit card that is paid off but under both of our names. I want to make sure that after I leave if she uses it that I am not responsible for paying any of it.

4. We both have our own 401K but we are keeping our own. Anything that we need to do here?

5. What about taxes? we used to file our taxes together, does that make a difference for next year?

6. Is there anything else that I am overlooking that I should be aware of?

Thanks for any help you folks can provide.

1. Do NOT sign a quit claim deed until your name is off the mortgage. Tell the court you are willing to let her have the house if she refinances to take your name off. Ask for an order for the house to be sold if she will not / can not refinance. Make sure you are aware of your right to 1/2 of marital equity, if any.

2. Call your motor vehicle department as far as the car titles. To take the other one's name off the loans, you will need to talk to the bank. They MAY do so with a minor fee, but they are not obligated to do so.

3. Cancel the credit card and have her get a new one in her own name.

4. There is no obligation to do anything with the 401Ks if you are happy with the split. Make sure that you both give the 401K bank new beneficiaries after the divorce.

5. Your marital status for tax purposes is whatever it is on December 31. If your divorce is final by Dec. 31, then you file as single (or head of household if that applies). If you are still married as of Dec 31, you file married, either joint or separate (under some circumstances, one of you can also file as head of household. See irs.gov for rules).

6. I would strongly suggest talking with an attorney, at least for an initial consultation. A mistake at this stage could be very expensive - and you clearly don't have much experience in this area. Make sure you're happy with the property division. You didn't mention kids, so I'm assuming there are none. If there are, the whole thing gets a lot more complicated.

 

[user2]

hmmm.. This is unexpected. I really don't mind her having the house and the equity left on it that's why I was just wanting to do the quitclaim deed. But I also didn't want to be responsible for the mortgage after I left.

I am at a point where I just want to get this over and done with. If I filed the papers for divorce now and she signed them without doing the refinancing for the homes or cars will this be a problem later on?

I suppose I am just concerned about spending a lot of money that I don't have right now for an attorney.

 

[LdiJ]

hmmm.. This is unexpected. I really don't mind her having the house and the equity left on it that's why I was just wanting to do the quitclaim deed. But I also didn't want to be responsible for the mortgage after I left.

I am at a point where I just want to get this over and done with. If I filed the papers for divorce now and she signed them without doing the refinancing for the homes or cars will this be a problem later on?

I suppose I am just concerned about spending a lot of money that I don't have right now for an attorney.

If both of you make the payments you are required to make, on time....and YOU don't want to make a major purchase that having your credit tied up in her home, would hinder, then it won't be a problem later on.

However, if either of you fall behind on any payments, you will negatively effect the credit of the other, and you won't be able to buy a house or anything else truly major as long as your credit is tied up in her home.

You might try to include a provision in the agreement that states that she has to refinance the house within X number of years if you are will to take a parital risk. I would absolutely not leave in open ended.

 

[user2]

thank-you for the information you've given me. This gives me a better sense of what I have to do.

 

[mistoffolees]

\ If I filed the papers for divorce now and she signed them without doing the refinancing for the homes or cars will this be a problem later on?

Yes, it can be a problem later on. Just read the 10 posts per week on this board from people who are suffering because they did exactly what you're proposing to do. Don't do it. Or, if you do, don't come back here to complain in 12 months when she stops paying the mortgage and your credit rating is ruined.

 

[LdiJ]

Yes, it can be a problem later on. Just read the 10 posts per week on this board from people who are suffering because they did exactly what you're proposing to do. Don't do it. Or, if you do, don't come back here to complain in 12 months when she stops paying the mortgage and your credit rating is ruined.

Not everyone does that Misto. The mortgage on our marital home remained in both of our names even though I kept the house for at least 3 or 4 years before I refinanced. Not only did I make every mortgage payment on time, but I paid extra towards the principal.

OP should know how his stbx is about paying the bills and maintaining a good credit history. He should also know whether or not she can realistically afford the mortgage. He should base his decision on that. If she is a lazy bill payer and doesn't care much about her credit, and/or she cannot really afford the mortgage payments, then he should follow your advice.

 

[mistoffolees]

Not everyone does that Misto. The mortgage on our marital home remained in both of our names even though I kept the house for at least 3 or 4 years before I refinanced. Not only did I make every mortgage payment on time, but I paid extra towards the principal.

OP should know how his stbx is about paying the bills and maintaining a good credit history. He should also know whether or not she can realistically afford the mortgage. He should base his decision on that. If she is a lazy bill payer and doesn't care much about her credit, and/or she cannot really afford the mortgage payments, then he should follow your advice.

Yes, one can blindly hope that the stbx won't do anything bad, or won't lose a job, or won't decide to spend their money on something else. But given the number of times it creates problems (you're here every day - you know that it's a HUGE source of problems), it's not worth doing routinely and there needs to be a pretty good reason to do it.

IF there's a good reason to leave his name on the mortgage, he just plain should NOT sign the quit claim. I can't see ANY rational reason to sign a quit claim before your name is off the mortgage.

My ex did it and she didn't get burned (I refinanced a couple of years later to get a lower interest rate and take some money out, anyway, so she's now off the mortgage), but I don't recommend it. And CERTAINLY, OP shouldn't sign the quit claim until his name is off the mortgage.

 

[nextwife]

Not everyone does that Misto. The mortgage on our marital home remained in both of our names even though I kept the house for at least 3 or 4 years before I refinanced. Not only did I make every mortgage payment on time, but I paid extra towards the principal.

OP should know how his stbx is about paying the bills and maintaining a good credit history. He should also know whether or not she can realistically afford the mortgage. He should base his decision on that. If she is a lazy bill payer and doesn't care much about her credit, and/or she cannot really afford the mortgage payments, then he should follow your advice.

I'm guessing this was BEFORE credit scoring became the standard in underwriting loans. These days, any significant open debt still in one's name impacts their borrowing ability EVEN if the other party stays current.

 

[LdiJ]

Yes, one can blindly hope that the stbx won't do anything bad, or won't lose a job, or won't decide to spend their money on something else. But given the number of times it creates problems (you're here every day - you know that it's a HUGE source of problems), it's not worth doing routinely and there needs to be a pretty good reason to do it.

IF there's a good reason to leave his name on the mortgage, he just plain should NOT sign the quit claim. I can't see ANY rational reason to sign a quit claim before your name is off the mortgage.

My ex did it and she didn't get burned (I refinanced a couple of years later to get a lower interest rate and take some money out, anyway, so she's now off the mortgage), but I don't recommend it. And CERTAINLY, OP shouldn't sign the quit claim until his name is off the mortgage.

I absolutely agree with the bolded. A quit claim should never be signed unless its in conjunction with a refinance.

However, I do thinks that its possible for someone to rationally determine whether or not its safe to leave their name on a mortgage for a period of time. Most of the horror stories that we hear here are because people didn't make decisions based on true rationality. Most of them knew that their spouse couldn't afford the mortgage, or car payment or whatever, but assumed that the divorce would somehow protect them from the creditors.

My ex not only left the mortgage in my hands, but left all of the rest of the joint debt in my hands, because he knew that I would do a better job of protecting our mutual credit than he would.

I suspect that your ex realized the same.

That's why its important to really look at what you are doing when you divorce. Its important to understand the credit ramifications and not just assume that the property settlement releases you from credit obligations.

Just so that you understand where I am coming from...in my state renters get a state tax credit for a portion of rent paid, and homeowners get a state tax credit for property tax paid.

I am constantly having to explain to some homeowners that their mortgage payment is NOT rent. Some homeowners honestly don't get that they aren't just paying another version of rent. Some of them honestly don't get that walking away from a home you have purchased is different than walking away from a home you are renting.

Its really sad how ignorant some people are...and its not really their fault all the time. If no one ever explains to them what they are actually doing, they may never truly understand it.

 

[mistoffolees]

I absolutely agree with the bolded. A quit claim should never be signed unless its in conjunction with a refinance.

Then why did you disagree with me when I told him not to do it?

 

[LdiJ]

Then why did you disagree with me when I told him not to do it?

That wasn't what I was disagreeing with you about. I was disagreeing with you about the fact that no one should ever agree to stay on a mortgage or other debt.

 

[mistoffolees]

That wasn't what I was disagreeing with you about.

Actually, it was.

OP said he was going to sign a quit claim deed and leave his name on the mortgage.

I told him that what he proposed was a very bad idea.

You disagreed with me.

You'd have a lot more useful role on this board if you would stop just automatically disagreeing with everything I say and actually think about the issues.

 

[nextwife]

I absolutely agree with the bolded. A quit claim should never be signed unless its in conjunction with a refinance.

However, I do thinks that its possible for someone to rationally determine whether or not its safe to leave their name on a mortgage for a period of time. Most of the horror stories that we hear here are because people didn't make decisions based on true rationality. Most of them knew that their spouse couldn't afford the mortgage, or car payment or whatever, but assumed that the divorce would somehow protect them from the creditors.

My ex not only left the mortgage in my hands, but left all of the rest of the joint debt in my hands, because he knew that I would do a better job of protecting our mutual credit than he would.

I suspect that your ex realized the same.

That's why its important to really look at what you are doing when you divorce. Its important to understand the credit ramifications and not just assume that the property settlement releases you from credit obligations.

Just so that you understand where I am coming from...in my state renters get a state tax credit for a portion of rent paid, and homeowners get a state tax credit for property tax paid.

I am constantly having to explain to some homeowners that their mortgage payment is NOT rent. Some homeowners honestly don't get that they aren't just paying another version of rent. Some of them honestly don't get that walking away from a home you have purchased is different than walking away from a home you are renting.

Its really sad how ignorant some people are...and its not really their fault all the time. If no one ever explains to them what they are actually doing, they may never truly understand it.

The bottom line is that NOBODY who wants continued access to credit should, under our current credit systems, allow an open loan to remain in their name to an asset for which they no longer have an ownership (or control) interest. Especially an open mortgage. In todays world, an open mortgage loan may lock the other party out of homebuying for the entirety of the remaining term on that loan. And 20 or 30 years can be a VERY long time! And that is with NO defaulted payments.

 

[LdiJ]

The bottom line is that NOBODY who wants continued access to credit should, under our current credit systems, allow an open loan to remain in their name to an asset for which they no longer have an ownership (or control) interest. Especially an open mortgage. In todays world, an open mortgage loan may lock the other party out of homebuying for the entirety of the remaining term on that loan. And 20 or 30 years can be a VERY long time! And that is with NO defaulted payments.

I don't disagree, but sometimes there is some value (avoiding a short sale, etc.) in allowing a few years for a refinance to happen.

A short sale is automatically going to do serious damage to the party's credit. Therefore having his/her credit tied up for a couple of years could be an acceptable risk in that scenario.

No one has ever suggested that someone leave their credit tied up for the entire life of a mortgage.