Divorcing couples have numerous decisions to make and issues to resolve throughout the process — from child support to determining custody and dividing assets. Settling the issues regarding car loans or what to do with marital vehicles may not seem like a big priority, but not handling the matter can have severe financial consequences. If you have one or more vehicles associated with the marriage, it is imperative that you speak to your family attorney regarding those vehicles and any outstanding loans on them.
Options for Car Loans
As with all other debts and assets in a divorce, it is important to remember that you will have to live with the terms of that division after divorce. Never assume a former spouse will pay for debts or that you can make decisions outside of the courts. Instead, it is best that couples always have an agreement for every debt, including car loans, in their divorce settlement. That way if one spouse fails to uphold their obligations within that settlement, the other spouse has a way to enforce judgment.
Joint financial obligations, such as car loans, can become an issue that delays a New Jersey divorce by months — or even years if the couple cannot agree. If a vehicle is owned jointly, it may be best to sell that vehicle to ensure no one is responsible for payments after the divorce is finalized. Sometimes selling a vehicle is not a feasible option — especially if the vehicle is the devoted family vehicle or has negative equity.
Another option is for one spouse to refinance the vehicle into their own name and using their own credit — removing the joint owner. The spouse refinancing will need to go through a formal loan process to qualify; therefore, they still need adequate credit and income.
A third option is to create a setoff arrangement that makes sure the vehicle is paid off. This protects both parties credit rating and ensures that no one is held responsible for payments.
Joint Car Loans Can Impact Credit
If both spouses are on a car loan, but one spouse is responsible for making the payments, this can be detrimental to the other spouse’s credit — especially if the responsible spouse fails to make the payments or refuses to make the payments. Even if a spouse is assigned the responsibility to pay the loan in a divorce settlement, that does not lift the other spouse’s legal obligation to make payments to the financial institution as their part of being on the loan itself.
Speak With a New Jersey Divorce Attorney Regarding Your Debts – Contact Romanowski Law Offices
Deciding how to handle marital debts, including car loans, is complex. Your attorney can assess any liabilities the marriage may have and help come to a solution that protects your finances and credit in the future. Contact Romanowski Law Offices today to schedule a consultation online or by calling 732-603-8585.