Can I Still Be Held Responsible for a Vehicle My Wife Won in the Divorce?

By Rob Jennings J.D.

Married couples frequently accumulate assets and debt in both their names, which can complicate matters in the event of a divorce. A jointly titled motor vehicle can be both an asset and a debt if you still owe money on it. If your wife receives a car that’s titled in both your names as part of a property division award or settlement, the loan and the vehicle can still cause you problems.

Assigning Responsibility

Typically, the spouse that retains the vehicle also assumes responsibility for the loan against it. If you're handling your case by consent order or marital settlement agreement, you'll want to make sure that responsibility for the loan is clearly distributed to your wife. If you've litigated your case through court and the judge awarded the car to your wife, you'll want to make sure the decree specifies that she will be responsible for the loan. In either instance, you should insist that she not only accept responsibility, but also refinance it into her own name. It's not in your best interests to have your name on a car loan for a vehicle you aren't driving.

If She Doesn't Refinance

If your wife doesn't or can't refinance the loan, you're still responsible to the creditor for the outstanding balance. Since the creditor isn't a party to your case or agreement, it can't be bound by the agreement. As such, ask the judge to order that if your wife doesn't, or is unable to, refinance the car by a certain date that she will then sell it and apply the proceeds to the loan. If you're settling your case by consent order or marital settlement agreement, make sure the same provision appears in your settlement documents.

Divorce is never easy, but we can help. Learn More

Indemnification Clause

Whether the car and loan is distributed by agreement or court decree, be sure to include a "hold harmless" provision with regards to the car loan. A "hold harmless" provision is an indemnification clause, requiring your wife to pay you back in the event that she fails to honor her obligation and the creditor comes after you for the money. This will make it easier for you to bring her back into family court to enforce the order. Furthermore, it can provide you with a layer of protection in the event your wife files bankruptcy.

Accident Liability

In addition to having your name on the loan, you need to worry about your name remaining on the title. You could face a lawsuit if your wife has an accident in the car and your name is still on the title. Unless you want to undergo the expense of having to indefinitely maintain your own insurance policy on the vehicle, insist that your wife change the title as part of the terms regarding property division. Failure to address the title issue could end up costing you even more than the loan itself in the event of an accident.

Divorce is never easy, but we can help. Learn More
How to Turn a Car Title Over to a Spouse in Divorce

References

Related articles

Divorce Laws on Mortgage Loans in Ohio

When you end your marriage in Ohio, you and your spouse have the option of reaching your own agreement about how to divide your marital property or you can have the court decide these issues for you. Either way, your divorce should decide which of you will keep the house -- but the court cannot order your lender to take your name off the loan.

How to Name a Living Trust

A living trust is a plan in the form of an agreement that manages all the property you place into the trust while you're still living. A common estate-planning tool, a living trust is created by the preparation and execution of a trust agreement, a document that identifies the trust's owner, the trustee -- the person who oversees the trust -- and lists the trust's provisions. A living trust needs a name because the trust is the owner of all the assets placed into it. The name allows the trust's owner to identify the trust as the owner on property transfer papers, other legal documents and financial accounts.

How to Be Released From a Mortgage in a Divorce

For many divorcing couples, their home is the biggest asset to be split -- and the biggest debt. Even spouses who can agree on how to divide the home often struggle with putting their plan in place because lenders get a say in what happens, too. It is relatively simple to remove your name from the title to the property, but you will have to deal with your lender to get released from the mortgage as well.

Get Divorced Online

Related articles

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

It’s usually easier to end your marriage than to get out of a joint loan obligation with your spouse. If you co-sign ...

Release of Former Spouse From Liability on a Joint Vehicle After Divorce

If the court awards you the family car in the divorce settlement, it may give you the car loan, too. If you and your ...

Divorce Laws and Automobiles

As you go through the divorce process, you and your spouse will work to divide all marital property, including debts, ...

Is Husband Responsible for Wife's Car Payments After Saying She Is Divorcing?

Whether you must continue making payments on your wife's vehicle after she announces that she's leaving you depends on ...

Browse by category
Ready to Begin? GET STARTED