ex-girlfriend still on mortgage

[tdweomer]

Hi!

Thanks to all for this great forum. I'm learning a lot and appreciate the contributions from so many knowledgeable people.

I have a question that I can't seem to satisfactorily figure out just on my own. My girlfriend, at the time, and I bought a house in October 2006. We broke up and she moved out in March 2008, but we never tried to change our mortgage in order to get her off of it: refinance, quit claim deed, etc. Now, I am 99.9% sure I will be filing for a Chapter 7 in the next six months. My current fiancée and I don't mind living in the house but we think it would definitely be better to "let the house go" (foreclosure, deed in lieu, etc.). As such I won't be reaffirming the mortgage during the bankruptcy if it gets that far.

So my question is "what happens to my ex and what rights does she have?" I know she couldn't "stop" me from my Chp7 and not reaffirming but other than that I haven't been able to find out exactly what she can and can't do. Can she demand to move in and we move out? Living rent free for a spell would make moving a bajillion times easier so I'd like to do that if I can. How bad does this wreck her credit? I would guess just the same as if she was in my position and just couldn't keep juggling life anymore, but I'm not sure. Can she sue me?

I doubt anything will actually happen other than her getting annoyed, but I'm not a gambler at heart. I want to know every angle I can before I pull the trigger on something and this is one huge trigger.

Some details:

• This is all happening in New Jersey.
• There is only the one, initial mortgage. No second mortgages, HELOCs, etc.
• Even counting my current fiancée's contribution towards running the household (we split everything 50/50) as rent I collect AND money my mother has been sending me every week for about 18 months as income I easily pass my state's means test.
• I'm employed full time but I have about double my AGI in revolving credit debt. Plus a little in student loans and back taxes (people that see all my details usually say "Jeeze! You should have filed two years ago!" )
• She's contributed nothing towards the house since March 2008.
• I've been living there the whole time and making all the payments (although I did let her claim it on her taxes for 2008, don't know if that matters).
• She has since gotten married, had a kid, and moved I think three times.
• She was on unemployment for a while. After that ran out she's been supported by her husband since.
• She hasn't made a peep about her possible taking over the house probably since she moved out three years ago.

Thanks in advance to anyone who takes the time to read all that!

[Pandora]

Your ex does have rights if she's on the deed. Since she hasnt quit claimed her rights to you, you cannot short sale it or anything else since her interest is still there. Then you get into the whole co-borrower thing - yet another headache to contend with. Also, problems can arise if she contributed any purchase money towards the house.

Filing BK removes your obligation to repay the debt once discharged, but it doesnt remove a co-signer nor their ownership, hence she will still be on the hook for the note as well as the owner. You filing BK will also affect her credit as she is responsible for the loan - the lender will go after her in full for the balance. The only way to not have her affected is to refinance the loan, which you apparently have already attempted to do without success.

As to if she can sue you - yes she can. If she cannot pay the loan after you default/file BK, creditors can garnish her wages, freeze accounts, etc. She can go after you for all of it.

Seek reputable counsel for advice on this entire situation as it gets pretty sticky before you go any further. There is something called a partition action, but again, whether it applies in your situation would depend on different things.

[tdweomer]

Thank you. I'm definitely going to get a lawyer before I do anything. I actually never tried to refinance. It was my plan to do so "eventually" but like a lot people I've been treading water waiting for things to get better and they haven't. Would refinancing so she's off of the house then letting it get foreclosed on raise any "red flags"? I don't think it would but I can see how it could look fishy to some people. Thanks again.