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posted: 5/18/2014 12:01 AM

Ex-wife's credit card debt scuttles home refinance

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Q. My wife and I got a divorce a few years ago. Our agreement stated I would get the house. She received most of the other cash/assets so I could keep the house.

The agreement also stated I would refinance the loan to get her off the mortgage. When that happened, she would "quit claim" the property to me, giving me sole ownership of the property. I was not working steady at the time so I was unable to get a loan and get her off the mortgage. So, she remained on both the mortgage and the title, though I made all the mortgage and tax payments.

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I have now had steady work for the past 18 months or so and am now in a position to get a loan and get her off the mortgage and title. I received a call from my mortgage guy yesterday who tells me there is a judgment against the property. Apparently, my wife failed to pay a credit card, got sued and they recorded a judgment against my house.

He tells me the judgment needs to be removed from the title before he can proceed with the loan. How do I do that? The judgment is for more than $12,000. I don't have that and I'm positive she doesn't have it either. Do I have any options here?

A. When one obtains a judgment against a party, one of the means of satisfying the judgment is recording a lien against property owned by the judgment debtor. This doesn't ordinarily result in immediate payment of the judgment. However, when the judgment debtor/property owner attempts to refinance or sell the property, the judgment appears on the title as a lien that must be satisfied for the refinance or sale to occur. In addition, the judgment lien earns 9 percent interest annually until paid.

So, what appears to have occurred here is the credit card company obtained a judgment against your ex-wife, performed a property search and learned your ex owned your home. They recorded the lien and waited for the inevitable, which occurred when you attempted to refinance.

One option you have is to attempt to negotiate with the credit card company. Explain the situation and offer them something to remove the lien. They would still have a judgment against your ex for the balance. They would simply give up their lien on the property. Unfortunately, given your ex's financial condition, the credit card company may look at this property as the only viable means to satisfy the judgment and demand most if not all the entire judgment to remove the lien. If your ex is employed, you could offer that information as a bargaining chip, as they could garnish her wages to satisfy the judgment.

Another option is to demand your ex have the lien removed. The fact that a judgment entered against her resulted in a lien against the property may be a violation of the divorce judgment. If so, you could file a petition in the court where your divorce was entered requesting the court hold her in contempt. This may motivate her in seeking some way to satisfy the judgment. Speak to your divorce attorney about this option.

Another possible option would be to refinance for an amount that would satisfy both the current mortgage obligation plus the judgment and pay off the judgment through the refinance. Of course, this means you are paying the judgment. You could then take appropriate action in divorce court to be reimbursed for this expense.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.

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