I have railed against the negative effects of spousal consolidation loans here and here. But with the exception of Public Servicing Loan Forgiveness (which negative effect can be found here), most the time that this type loan goes poorly is only if there is a breakup. Of course there is a joke around our office “50% of marriages end up in divorce, unless you have a spousal consolidation then it jumps up to 90%).
Now if you have an amicable divorce (I know those who do), not a problem. It’s when the comakers no longer speak or worse are out to get each other that it gets the worst. I had a borrower last Thursday that even though should would have $25,000 in loans forgiven from being permanently disabled refused to do so because it would help her husbands debt to income ratio.
Another person refused to sign a forbearance form when their former spouse wanted them to do so. As a result there account was 310 days delinquent and on the edge of default. Why would you let spite ruin your credit I’m not sure but for some all bets are off.
I have pretty soundly explained why I think these things are the bane of any of our existences. But as I have stated before there is nothing that can be done about them. The lessons that can be learned in them is even if you do not like your spouse at all anymore please communicate enough to not ruin your own life when it comes to your loans.
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