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 Family Law Advocacy Group, our San Bernardino divorce Lawyer 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.
Making Agreements
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 Family Law Advocacy Group, 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.
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