Unfortunately, your credit will take a hit and you will be served if the property ever goes to foreclosure. New Jersey is a deficiency judgment state which means the lender could decide to come after you for the balance unpaid after the sheriff sale. However, most lenders do not go to this extreme.
You are in the right forum though. You may consider a bankruptcy to personally avoid the ramifications of his actions. Besides personally removing any obligation to the mortgage it could wipe out your joint credit cards as well.
If I can be of any assistance, please don't hesitate to call me. My office works with many divorce attorneys and their clients on these exact issues. We offer a free consultation.
Best of luck
The above should not be construed as legal advise. You should make an appointment with a qualified attorney in your state to discuss the specifics of your case. Additionally, nothing in this writing should be construed as a retainer agreement. Should you wish Veitengruber Law to be your attorney, please contact us to make an appointment.
If you have been removed from the deed and not the mortgage, you no longer have any ownership of the property but you still have the financial obligation. Your husband's bankruptcy case, should he file and complete one, will not remove your liability on the mortgage - only his liability. You will still be on the hook. In addition, even if the mortgage company forecloses and does not seek to recover a deficiency balance, which they arguably as the property is no longer your principle residence. In addition, as this property is no longer your principle residence, the debt forgiven as a result of the foreclosure becomes income in the eyes of the IRS and your mortgage company will send you a 1099A form the January following the sale and you may be required to pay income tax on the forgiven debt depending on your tax situation. I would recommend you speak with an experienced bankruptcy attorney about possibly filing your own bankruptcy case to avoid some of the headaches outlined above.
Bruce C. Truesdale
Removing your name from the Deed only removed your ownership interest in the property, it did not relieve your personal financial obligation to the Mortgage Company. What this means is that upon a foreclosure sale, if the Mortgage Company does not receive the entire amount owed to it from the sale, they can seek payment on the deficiency from you. Assuming your ex-husband recieves a discharge in his bankrutpcy he will be relieved of any obligation to pay the deficiency balance to the mortgage company, thus the entire burden would fall on you.
In the current economic climate, it is rare that mortgage company will seek to pursue you for the deficiency, however your problems are two fold. First, since the property is not your residence, if the Mortgage Company decides to forgive the deficiency balance you will receive a 1099 for the amount of debt forgiveness, which is deemed income to you and will have to be included on your tax return and will most likely result in your owing income tax to the IRS and the State. Again your ex-husband will not incur this tax obligation as the porperty is his principal residence and additionally he will receive a discharge in his bankruptcy.
The other issue is that as i am sure you are presently experiencing, your credit is taking a beating because your ex-husband is not paying the mortgage. This will continue to negatively impact your credit until you do something to stop it, like filing your own bankruptcy. Once you file, a bankruptcy the automatic stay will go into effect, which stay will prevent the mortgage company from continuing to report negativley on your credit report, which will allow your credit scores to begin to recover.