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Protect personal credit after a divorce

The family home is often the largest marital asset, especially for younger couples. If they decide to divorce, Texas spouses have to decide what to do with the house. There are advantages and disadvantages of each option, so it's important to carefully consider them and speak with an attorney or financial professional prior to entering into a settlement agreement. Some of the paths available include one spouse continuing to live in the house or selling the property to divide the profits between both spouses.

A custodial parent may want to keep the family home to provide stability for their children or just because it has sentimental value. Doing so might mean they will have to buy their spouse's interest in the property. There are a couple of ways to do this. They might refinance the house in their own name and give their former spouse half of the equity in cash. They might also give up any current or future spousal support in exchange for the house.

The spouse who doesn't keep the house needs to ensure that their credit is protected. Merely taking their name off the title won't protect them from foreclosure action in the future. In order to remove their own financial responsibility for the property, the spouse who retains ownership of the family home will need to refinance the mortgage in their own name.

Personal credit could be damaged during a divorce, but giving up the family home doesn't have to affect a person's ability to purchase property in the future. An experienced divorce lawyer might help a client protect their credit by adding a clause in the property division agreement that requires the other spouse to refinance the mortgage within a specific time frame. Whether one spouse keeps the house or they decide to sell it, with careful planning, both spouses may be able to protect their own financial interests.

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