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Vehicles and Divorce

Divorce means it’s time to divide up marital property and debt. With physical items like couches or electronics, that’s usually pretty straight-forward. Dividing credit card debt often is just a numbers game. However, when you have a big-ticket item that has a debt associated with it, such as vehicles, things get a little more complicated. If the vehicles are totally paid off, dividing them up is a lot like dividing up any other material possession. When there is a debt on the car, we have to get more creative.

Typically, whoever takes the vehicle usually takes the debt that goes along with it. So, if you want to ask the court to award you the brand new expensive SUV purchased last month, just know that you’ll probably be the one making all the payments from now on. If the car loan is only in your name, then that makes it simple. With married couples, though, it’s pretty common to have both spouses’ names on the loan. When people get divorced, the final order tells the spouses what to do and who gets what. The final order can say that you are responsible for the payments on that SUV.

What the order cannot do is require the bank to take your spouse’s name off of the loan contract. This means that your spouse remains responsible for the loan in the eyes of the bank. You can try to refinance the car or renegotiate the terms of the loan with the bank, but the bank is not required to let your spouse out of the loan. The reason this can be a problem is if you fall behind on the loan payments, your spouse’s credit will also be negatively affected. If your spouse ends up having to make payments on the loan because you defaulted, your spouse can then sue you for the amount that he or she had to pay.

If you have debt on all your vehicles with both spouse’s names on the loan for each vehicle, it may be a good idea to try to sell the vehicles in order to avoid this messy situation. Having a serious conversation with your lender is another good first step to find out if it’s possible to refinance the vehicle or otherwise get your spouse’s name off the loan for the vehicle you’re asking for in the divorce.

Dividing assets that have debts attached can be complicated. There are lots of issues and potential future complications. Call us today at (253) 272-9459 to review your assets and debts. We can develop a strategy for your future together.

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