Tales from the Trenches....the Dangers of Co-mingled Assets

Once upon a time there was a middle aged women with many children (5 to be exact) who had a good job, a good marriage and a beautiful home.  One day she came home from work and just as she was wondering what to serve for dinner the sheriff knocked on her door and told her she had to leave he was seizing the house for the mortgage company.  Stunned, but not stupid, she quickly called her lawyer who told her to pack as much stuff as she could get in her car, find an apartment and start divorce proceedings. 

As unusual as this story may seem to you we have seen it more than once.  So what happened?  The Husband had been self employed and the business had hit a bump.  Without discussion he went to see a mortgage broker who arranged to refinance the home.  He went home and told his wife about the resolve and told her she had to go to the lawyer and sign the documents.  Which she did.  Once the new mortgage was in place he never made a payment.  Her credit has always been immaculate but now it was showing 2 judgements against her from the mortgage company.  Once the house was sold (by the mortgage company) the judgements were paid but her credit was ruined for seven years.  She couldn't even get a new car.

So what should have happened?  The lender would have been smart to request ILA (independent legal advice) for both spouses.  BUT..... at the end of the day she signed a legal contract and left it to her husband  to take care of it.  The red flag should have been the refinance.  Since their credit was separate she had no idea how bad his was.  Never co-mingle anything until you have done your due-diligence.  If you're not sure what you should be doing get your own lawyer.  And if, like in this woman's case, it causes a rift between you and your partner then guess what.  The rift was coming anyway.