Secured Loans

by Millie

I have a home I bought in 1981 which is fully paid for. I got a new husband in 1999 and allowed him to use my home as collateral for his loan solely in his name.

If we divorce who is responsible for paying that loan?

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Pitfalls of Securing a Loan
by: Lynn

Property that is offered as collateral or security against a loan remains bonded until such time that the loan is fully paid off.

In case of divorce, the husband will still be responsible for repaying the loan, however, should he default on the repayments, the lender has the right to use the home to effect payment of the loan.

The lender may therefore demand the sale of the house and apply the proceeds of the sale to the repayment of monies due.

Theoretically the balance of proceeds from the sale of the home will revert to the homeowner, barring any other claims by the ex husband.

This illustrates the importance of being aware of the consequences of signing surety or pledging property as collateral for a loan by a third party.

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