Who Pays the Mortgage During a Divorce in Louisiana?
When spouses separate, one of the first financial questions is often: Who is supposed to pay the mortgage?
The answer is not always as simple as saying the person who stays in the house has to pay it. In a Louisiana divorce, responsibility for the mortgage can depend on whose name is on the loan, whether the home is community or separate property, who is living in the home, any temporary court orders or agreements between the spouses, and how the property is ultimately divided.Understanding the difference between paying the mortgage now and determining who is ultimately responsible for that expense can help you avoid costly surprises later.
Does the Person Living in the House Have to Pay the Mortgage?
Not necessarily. One spouse may remain in the family home while a divorce is pending, particularly when children are involved. The spouses may agree on who will pay the mortgage, or the issue may be addressed as part of the divorce proceedings.
However, simply moving out of the house does not automatically remove a spouse's financial obligations.If both spouses signed the mortgage, the mortgage company generally still considers both borrowers responsible for the loan. A divorce filing, separation, or even an agreement between the spouses does not automatically change the mortgage contract with the lender.This means that if the mortgage is not paid, missed payments could potentially affect both borrowers regardless of which spouse was supposed to make the payment.
What If One Spouse Pays the Mortgage After Separation?
This is where Louisiana's community property laws become particularly important.
The community property regime may terminate before the spouses actually divide all of their property. As a result, there can be months ,or sometimes much longer, between the termination of the community and the final division of the home, mortgage, bank accounts, retirement accounts, debts, and other property.During that period, one spouse may continue paying the mortgage.Depending on the circumstances and the source of the money used to make those payments, that spouse may later assert a reimbursement claim during the community property partition.
Louisiana law generally provides for reimbursement in certain circumstances when a spouse uses separate property to satisfy a community obligation. The exact amount of any reimbursement and whether one is owed depends on the particular facts of the case. See La. Civ. Code art. 2365.For example, suppose a husband and wife own a community home with a $2,000 monthly mortgage. After the community terminates, the husband continues making the mortgage payments from his post-termination income for a year. Those payments may need to be considered when the parties eventually divide their community property.That does not necessarily mean he simply receives every dollar back. Reimbursement claims can be affected by several factors and should be evaluated as part of the overall property division.
What If One Spouse Has Exclusive Use of the House?
Who is living in the home can also matter.Louisiana law allows a court, under certain circumstances, to award one spouse the use and occupancy of the family residence while the divorce is pending. But living in the home and paying the mortgage are separate issues.A spouse's exclusive use of a community residence can become relevant when the parties later address reimbursement claims, expenses associated with the property, or potential rental-value claims.For that reason, it is important not to assume that:
"I'm living there, so I automatically owe the mortgage,"
or
"I moved out, so the house is no longer my financial responsibility."
Neither assumption necessarily reflects how the issue will ultimately be handled.
What Happens If Both Names Are on the Mortgage?
This is one of the most important distinctions in a Louisiana divorce:
A divorce judgment or property agreement between spouses does not automatically release someone from a mortgage.For example, the spouses may agree that the wife will keep the house and be responsible for the mortgage. But if both spouses originally signed the mortgage, the lender's rights are separate from the spouses' agreement with each other.The spouse keeping the house may eventually need to refinance the mortgage into his or her individual name if the other spouse is going to be completely removed from the loan.Until that happens, simply transferring ownership of the house does not necessarily eliminate the other spouse's obligations to the mortgage company.
What Happens to the House When the Property Is Divided?
A Louisiana divorce does not necessarily require the spouses to immediately sell their home.There are several possible outcomes.
One spouse may keep the house and refinance it. The parties may agree to sell the home and divide the proceeds. The home may be allocated to one spouse during the community property partition. In some cases, the parties may temporarily continue owning the property together while deciding what to do next.
The mortgage balance is considered along with the value of the property and the rest of the community estate when the parties eventually divide their assets and liabilities.
Louisiana's community property partition procedure allows courts to allocate community assets and liabilities between former spouses and address claims arising from the former community. See La. R.S. 9:2801.
Should You Keep Paying the Mortgage During a Divorce?
Stopping mortgage payments simply because a divorce has been filed can create serious financial consequences.
Before deciding to stop paying, refinance, sell the home, withdraw large amounts of money, or make other significant financial changes, it is important to understand how that decision could affect both your immediate finances and your eventual community property claims.
Keep records of any payments you make toward the home after separation, including:
Mortgage statements
Bank statements showing each payment
Property tax payments
Homeowners and flood insurance
Major repairs or necessary expenses associated with the property
Documents showing the source of the money used for those payments
Those records may become important when the parties later determine reimbursements and divide their property.
The Mortgage Is Only One Piece of the Property Division
For many divorcing couples, deciding what happens to the family home is tied to much larger financial questions.Keeping the home may sound appealing, but the real question is whether keeping it makes financial sense after considering the mortgage balance, equity, refinancing requirements, insurance, taxes, maintenance costs, other community debts, retirement accounts, and the spouse's post-divorce income.There is often more than one possible path to resolving these issues. The most aggressive or emotionally appealing option is not always the option that produces the best financial result.
Talk With a Louisiana Divorce Attorney About Your Home and Mortgage
If you are considering divorce and are concerned about who will pay the mortgage, who will remain in the family home, or what will happen to the property's equity, it can help to address those questions early.
Moisant Law Firm assists clients with divorce and community property matters in Jefferson Parish, New Orleans, and surrounding Louisiana parishes. We can help you understand how your home, mortgage, debts, reimbursement claims, and other assets may fit into the larger financial picture of your divorce.Every divorce and community property matter is different. An attorney can help you evaluate the available options and determine which approach makes sense based on your particular circumstances.
This article is for general informational purposes only and does not constitute legal advice. The outcome of any family law or community property matter depends on the specific facts and circumstances of the case.
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