What Can I Do if I'm Getting Divorced & Cosigned on My Ex's Truck?

By River Braun, J.D.

What Can I Do if I'm Getting Divorced & Cosigned on My Ex's Truck?

By River Braun, J.D.

If you cosign on your ex's truck, you are legally liable for your ex's truck payments until your obligation to the lender releases the loan. When you cosign a truck loan or other vehicle loan, you agree to be responsible for the payments on the loan if the other person stops making payments for any reason. The loan agreement is a legally enforceable agreement between you and the lender. The agreement does not have an exception for matters related to a divorce.

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Loan Agreement vs. Divorce Order

A family court judge may enter an order awarding the truck to your ex-spouse and ordering your spouse to hold you harmless for any debt owed on the truck. The judge may even order your ex-spouse to take all reasonable steps to have your name removed from the account.

Your divorce order is binding on both you and your spouse. The divorce order is not binding on a lender. The loan company for your ex's truck is not obligated to release you from liability for the account even though the judge ordered your ex-spouse to release you from it. A lender does not have any incentive to release your liability for the truck loan.

If your ex fails to pay the truck payments after your divorce, the lender will look to you for those payments, regardless of who has possession of the truck. As long as you remain on the loan agreement, the lender can pursue all legal collection actions, including filing a collection lawsuit against you if your ex-spouse fails to pay the truck payments.

If the lender pursues you for the debt, you can take your ex-spouse back to court. The court cannot force the lender to take specific actions or prevent the lender from taking specific actions. However, the court can order your ex to reimburse you for the expenses related to the truck and any collection actions. Unfortunately, this remedy may be too late to prevent damage to your credit rating.

Taking Steps to Remove Liability for a Cosigned Truck Loan

There are some measures you can take to be legally relieved of your obligation to pay the debt owed on the truck following a divorce.

These include paying the loan in full, refinancing the truck loan, or keeping the truck, each of which are described in full below.

Pay the Loan in Full

You or your ex-spouse can pay the loan in full, thereby releasing your legal liability for the debt that you cosigned with your ex. Many states have equitable property division laws, which allow judges to divide marital assets and debts in a manner that may not be “even" but is fair. Therefore, if the judge awards you a greater portion of the marital assets, you may want to pay the loan on the truck in full if your spouse refuses to take other steps to release you from liability for the truck loan.

Also, you may ask the judge to include a provision in the final divorce order that requires the truck loan to be paid in full from the sale proceeds of marital assets. For instance, if you're selling the marital home, you may request the judge to issue an order that the truck loan will be paid in full from your ex-spouse's portion of the home sale proceeds.

Refinance the Truck Loan

Your ex-spouse can apply for a new loan to pay the existing loan on the truck. Since the new loan does not have your name on the loan agreement, you are not responsible for the debt owed on the truck once the current loan is paid in full through the refinance.

Keep the Truck

You could ask the court to grant you possession of the truck and either sell the truck to pay the loan or refinance the loan in your name only. Always be careful to ensure you are not losing money by accepting a vehicle that's worth less than the debt owed. If the truck is worth less than the payoff of the loan, you should receive additional marital property to offset the loss.

There are ways to avoid being responsible for your ex-spouse's truck payment. However, you must be proactive. Research the value of the truck and compare that to the payoff of the loan to determine the best option for avoiding liability for the loan you cosigned with your ex-spouse.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.