When a couple
divorces, not only is the marital
property divided, but the debts are also divided. One of the most interesting topics that
comes up and can impact a divorce is when the couple has financed vehicles.
How are these situations handled? If you and your spouse have a loan out
on your car or multiple vehicles, there needs to be set rules that allow
you to come up with the best option for division.
At James D. Madden & Aruna P. Rodrigo, Family Law Attorneys, our San Bernardino divorce lawyers
want to make this process as simple as possible. There are multiple options
you can utilize when dividing a financed vehicles during divorce. Our
firm provides you with some of the options so you can choose the right
path for you and your soon-to-be ex-spouse.
Refinancing the Loan
Whether the car is to go to you or your spouse — whoever wants to
keep it — there is a possibility to refinance the loan that was
used to purchase the vehicle. You would have to endure the entire process
again to show that one party can afford the vehicle on their own and then
sign the loan without the other party’s name. If you do not refinance
and both names remain on the loan despite one person keeping the vehicle,
both parties would be considered responsible for the payments.
Selling the Vehicle
When couples take out a loan for a vehicle, they often do so with both
names so they can achieve a better credit rating and both afford the payments.
If a couple splits and divorces, it may be difficult for one party to
pay the costs of the loan. If this is the case, refinancing may not be
an option for the couple. If you sell the vehicle, you can pay off as
much of the loan as possible and the remaining debts would be divided
between both parties.
Paying the Loan
If possible, you and your spouse can pay off the remaining balance on the
loan. You can then determine the plans for the vehicle, even selling it
to a third-party. Should you decide to sell the car, you and your spouse
would split the proceeds upon divorce.
If you and your spouse have tried refinancing the loan, paying the loan,
or selling the vehicle, there may be another option that you can utilize.
It may not always be possible, but there is a possibility that you and
your spouse can use a “set-off agreement.” With this option,
one spouse will remain responsible for the payments on the loan, but these
payments will be in lieu of other payments such as those associated with
alimony. The amount taken off one form of support would have to be equivalent
to the payments for the car.
Divorce is difficult and dealing with financed vehicles can bring out even
more contentious matters. If you and your spouse are unable to come to
an agreement, or one spouse doesn’t follow through with the court
orders, you may need the help of legal counsel.
At James D. Madden & Aruna P. Rodrigo, Family Law Attorneys, we have a family law specialist who
understands how the courts handle situations of property division with
regard to financed vehicles. We know the various methods available to
you to help alleviate this burden.
Call us today and we can discuss your options in a free consultation and provide you
with the information you need to move forward with a divorce. Don’t
be blindsided by a difficult situation such as handling financed vehicles
during divorce. Allow our firm to help you.