A separation also raises questions about the common finances: loans, real estate – what’s next?
Shared credit can become a financial problem when it comes to separation. We explain what happens to loans in the event of a divorce and what to look out for in real estate.
A signature is binding
For marriage as well as for borrowing. In the case of a loan, the signature in the case of a divorce also survives a marriage. Because whether a borrower was married or not when signing it usually doesn’t matter in the repayment. This means that even in the event of a divorce, the signing party (s) is responsible for repaying the loan.
Case 1: Only one spouse took out the loan
If only one spouse took out the loan alone, he or she is also solely responsible for repayment in the event of a divorce. The other partner is not liable for the loan if he did not sign it when the loan was taken out. In the event of a divorce, the assets acquired jointly are divided, but not the debts. Incidentally, this includes not only loans, but also an overdraft checking account – as long as it was not a common account.
Case 2: Both spouses have taken out the loan
It is different if the couple took out a loan together and both signed the contract accordingly. In this case the borrower is the couple, both are jointly and severally liable. If the rates are no longer served, the bank can contact both spouses. For the bank, it does not matter whether the marriage still exists or not – the loan agreement exists regardless of marital status. Normally, both debtors will be prosecuted equally. If one of the partners can no longer pay the installments, the other partner is automatically used for the repayment. However, the bank then demands not just half, but the total amount. The bank can choose which borrower to use for the repayment.
The divorce is going – the loan too
The moment a loan is signed is full of positive thoughts about the future. When the day of the move-out is just around the corner, the person who signed the loan agreement must continue to serve it. Even if he moves out of the common house. In addition to any maintenance payments, it can then become financially tight.
In this case, however, the borrower has the option of having the monthly loan installments deducted from his or her income when calculating the maintenance costs to the ex-partner. Thus, the ex-partner who is not a borrower, but still lives in the house, is still half charged for the loan.
Special case: real estate loan
The regulation of real estate loans in the event of a divorce depends on two factors: the loan agreement and the land register entry.
Loan agreement: The person who signed it is liable for a loan – regardless of whether the person is married or not. If both spouses have signed the contract for the home loan or home loan, both are liable for the full amount, not just half.
Land register entry: Anyone who is registered in the land register of a property is as liable for the payment of the property as the borrower – even if the person has not signed the loan agreement.
What to do in the event of divorce with a shared property?
Direct sale: To sell the property, both spouses must give their consent. None of the co-owners can be forced against their will to sell their property privately.
Transferring the co-ownership share: In order for the acquiring spouse to become the sole owner, the value of the property must be determined. An expert opinion is required. The spouse who transfers his co-ownership share receives his share after deducting any existing debts.
Renting: Renting makes sense if the termination of the house loan and the associated prepayment penalty are to be avoided. Both spouses are entitled to half of the rental income. Existing liabilities are also serviced equally by both ex-partners.
Establish home ownership: If the property consists of at least two residential units, the establishment of home ownership can also be considered. For this, a certificate of completion from an architect must be obtained and a declaration of division must be notarized. Then each spouse can decide for themselves whether to rent, sell or occupy part of their property.
With all the love: This is how you secure yourself financially in advance
As always, caution is better than forbearance: Even in good times, a high credit should be carefully considered. Whoever commits himself to a loan is also after the marriage. Your own finances, whether married or not, should be viewed realistically beforehand so that you can actually continue to bear the financial burden in the event of a divorce. However, that doesn’t have to stop anyone from planning a future together.