If the spouses took the loan together, they still have to pay it back even after the divorce. A loan is a joint and several liability.
Credit loan or loan for two?
If we decide to take a mortgage together with a spouse, we are obliged to pay it back, regardless of the property separation established (or not). By applying for such a commitment, we can enter it alone or with a life partner. If we take a loan ourselves, we have more influence on the terms of the loan or repayment schedule. We are also fully responsible for its timely repayment. If we fail to do this, the bank will have the right to take certain steps to recover the money borrowed (including interest).
The repayment obligation is not related to our current family situation. What does this mean in practice? The fact that if we decided to get a loan while married, we will have to pay it back when we get divorced. What if we took the loan together with another person? Then, the details of the two borrowers will appear on the loan agreement. Importantly, they are equally responsible for repayment of the obligation.
Legal consequences of divorce
When a divorce is pronounced, the property of the spouses ceases to exist. They may apply for a judicial distribution of joint property. Unfortunately, their debts can no longer be divided. This means that if two people have taken out a loan, they must pay it back even after divorce. This obligation applies equally to both borrowers. Until the loan is fully repaid, they both remain debtors for the bank.
In accordance with article 56, paragraph 1 of the Family and Guardianship Code, a divorce decree can be applied when the spouses have broken down permanently and completely. However, in the light of Article 366 of the Civil Code, several debtors may be obliged to pay the liability in such a way that the creditor has the right to demand all or part of the benefit from all debtors at the same time or from each of them separately. Satisfying creditor’s claims by any of the debtors releases the others from financial liability (solidarity of debtors). Conversely, until the obligation lasts, all debtors remain responsible for its repayment.
What about a loan after divorce?
Even after divorce and division of property, the loan repayment obligation remains. The court may decide who will take over certain tangible goods, but will not decide who should repay the loan. This is because it was enlisted by two people whose relationship status does not matter. This means that they must repay the loan regardless of whether they are in a relationship with each other or are completely strangers to each other.
In turn, only the number of borrowers is important for the bank. Importantly, the financial institution may issue a payment order to each of these persons. Thus, even if the spouses agree on divorce in the event of divorce, the bank will remind the other borrower of it in the absence of payment. This will happen even if he does not use the allocated funds. In this situation, a good solution is to transfer the loan to one of the spouses.
Is it possible to transfer the loan to another person?
Pursuant to Article 519 of the Civil Code, it is possible to transfer the debt to a third party or only to one of the spouses. Takeover of the debt can take place:
– by the conclusion of a contract between the creditor and a third party and with the debtor’s consent;
– by concluding a contract between the debtor and a third party and with the consent of the creditor.
The creditor’s consent may be submitted to either party. However, such a statement is ineffective if the creditor was aware that the person taking over the debt would not be able to pay it back. Under Article 522 of the Civil Code, a debt assumption agreement must be in writing to be valid. This also applies to the creditor’s consent to such “assignment”.
Transferring a loan to a former spouse is possible if he or she agrees. Then both parties appearing on the contract should go to the bank and state in writing who will pay the installments for the loan. In view of a consistent statement from both parties, the other borrower will be released from the repayment obligation.
However, this solution is not as easy as it may seem. Banks willingly sign contracts with more borrowers, as this is better security for them. Even if one debtor defaults, there is always a person who can be held financially responsible.
If only one borrower is to appear on the contract, he must have solid security that will allow him to pay the debt. In a situation where the loan is to be transferred to another person, the bank will analyze its creditworthiness and credibility. He will also check it in the debtors’ bases and compare the amount of income received with the cost of living. If the bank decides that it will be too risky to transfer the loan to another person, it will not agree. In such a situation, the former marriage will have to continue to repay the loan.
What about a loan after divorce? Summary
If the bank does not agree to transfer the liability, we will be able to “get along” with the other borrower. When he is a reliable payer, we can arrange that he will repay the loan and pay the subsequent installments. Especially if he uses the allocated funds. Then the other person appears in the papers, but does not have to worry about credit. At least until the co-borrower repays it on time. However, if there is a delay in repayment, the bank may enforce its payment even from the spouse who does not want to have anything to do with the loan.
Another solution is to jointly repay the loan and then settle with each other. Problems can arise when the spouses split up in disagreement. In such a situation, it may happen that one of the parties specifically fails to repay the loan in order to cause the other worries and unpleasantness. And with long delays in repayment, enforcement actions to recover the debts will affect each party.