How Divorce Can Ruin Your Credit if You Don’t Sell the Home

by Troy Moultrie

How Divorce Can Ruin Your Credit if You Don’t Sell the Home

 

Divorce isn’t just emotionally draining — it can also wreck your financial future if you don’t take the right steps with your home. One of the biggest mistakes divorcing couples make in Utah is deciding to “wait it out” or trusting a spouse to refinance. Too often, this ends in damaged credit, foreclosure threats, and years of lost financial opportunities.

 

As a Certified Divorce Real Estate Specialist, I’ve seen first-hand how quickly things can go wrong when the home isn’t handled properly. Here’s what you need to know.

 


 

The Hidden Danger: Staying on the Mortgage After Divorce

 

When the divorce decree is finalized, the judge may order one spouse to refinance the home to remove the other’s name from the loan. On paper, that sounds simple. In reality, it rarely happens on time — and sometimes, it never happens at all.

 

That means your name can stay tied to a mortgage you no longer live in. And if payments are missed? Your credit score takes the hit just like theirs.

 


 

Scary Story: When a Spouse Stops Paying on Purpose

 

 

One Utah homeowner thought she was safe after her divorce decree gave her ex-husband the house. The court ordered him to refinance within six months. Instead, he stopped making payments altogether.

 

  • Result? Both names were still on the loan, so her credit score tanked by over 150 points.

  • Consequence? She couldn’t qualify for a new mortgage for years, and when she finally did, her interest rate was much higher.

  • Lesson? The divorce decree alone doesn’t protect your credit.

 

 


 

Why Selling Often Makes More Sense Than Refinancing

 

Refinancing might sound like a fair option, but it carries serious risks:

 

  • Not every spouse qualifies for a new loan on their own.

  • Even if they do, interest rates might make payments unaffordable.

  • Delays in refinancing can leave both spouses exposed for months (or longer).

 

 

Selling the home immediately provides a clean financial break and ensures both parties protect their credit and equity.

 


 

Other Ways Divorce Damages Credit (If You’re Not Careful)

 

  • Late mortgage payments during the divorce process

  • Unpaid property taxes or HOA fees

  • Utilities in both names that go unpaid

  • Lingering joint debts tied to the home

 

 

Each of these can drag down your credit score and haunt you for years after the divorce is over.

 


 

✅ Checklist: Protecting Your Credit in Divorce

 

  • Remove your name from the mortgage (via sale or refinance ASAP)

  • Close or separate joint accounts tied to the home

  • Verify payments are current before transferring ownership

  • Get copies of mortgage statements each month until the home is sold

  • Work with a Certified Divorce Real Estate Specialist to guide the sale

 

 


 

❓ FAQs: Divorce, Credit, and Home Sales in Utah

 

Can a divorce decree remove my name from a mortgage?

No. Only a refinance or sale removes you from the loan.

 

What if my spouse refuses to refinance?

The court can order a sale of the property, but your credit is at risk until that happens.

 

Is it better to sell before the divorce is final?

In many cases, yes. Selling early prevents missed payments and credit damage.

 

Can my spouse ruin my credit on purpose?

Unfortunately, yes. If your name is still on the mortgage and they stop paying, your credit suffers too.

 


 

Why Work With a Certified Divorce Real Estate Specialist

 

Not every Realtor understands the dangers of divorce real estate. A CDRES is trained to work with attorneys, judges, and financial professionals to protect your credit and equity. Acting quickly with the right guidance ensures you can move on with your life — without years of financial damage.

 


 

Bottom Line

 

If you’re going through a divorce in Utah and the family home is involved, don’t wait. Selling quickly may be the safest way to protect your credit, your equity, and your future.

 

👉 Schedule a confidential consultation today to discuss your options before it’s too late.

agent
Troy Moultrie

ASSOCIATE BROKER | UTAH LUXURY REALTOR | License ID: 11195148-AB00

+1(435) 327-5545 | troy@utahluxteam.com

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