Unfortunately, the divorce rate in Germany is slowly falling – around eleven married couples out of 1,000 get divorced each year. If there is a divorce, the ex-partners not only share the assets they have acquired together, but also the current loan liabilities. How do you deal with existing loans in this case?
Who is liable to the bank?
If only one of the spouses has signed the loan agreement, he or she must be solely liable to the bank for the loan obligations. This means that after the separation, he must continue to pay off the current loan.
In principle, it is of no interest to the bank whether the couple is divorced or not, because such circumstances can in no way affect the loan agreement.
Even if one of the spouses has moved out, they still have to repay the loan taken out in their name. And if the separation of goods has even been agreed, the person who signed the loan agreement is still liable.
Signed together – stick together
If the two partners have signed the loan agreement together, a loan becomes a joint debt for which they are jointly and severally liable.
After the divorce, the bank contacts the two ex-partners and demands that the loan be paid off.
Otherwise, the bank can insist on the repayment of the loan from one of the spouses, i.e. either wife or husband must pay off the full amount of the loan. It won’t work if a spouse is told that he owes only half of the bank’s loan.
A spouse is still liable for the loan liabilities, even if he has agreed to pay off the existing loan on the basis of a divorce agreement. This can only be coordinated by the bank, which decides whether one of the spouses can be released from joint credit liability.
If one of the spouses threatens to go to court
As a rule, the roles in a marriage are distributed in such a way that the woman takes care of the children and the man takes the money home and pays all the common loans. After a separation, the man wants the woman to pay the still running loan. The appeals that it has no own money to do so.
The case can also go to court, but there are also solutions that you might want to consider:
- If the spouse does not have enough money to service the loan, a sale would be the best way to cover the outstanding debt with the proceeds.
- The shared condominium can also be kept and rented. The divorced couple can split the rental income and corresponding maintenance costs, or use it to pay the monthly installments.
Conclusion: divorce and joint loans that still run afterwards are a delicate issue. You should therefore always think about who will continue to serve you in the event of a divorce.