Divorce Car Loan Under My Name: The Implications

When a couple chooses to divorce, they must sort through their assets and liabilities to decide who will take what. However, if the couple can’t agree on how to divide marital assets, they would have to take the cast to court. The cars owned by the couple are also considered marital assets and must be divided. However, things get a bit completed when the car loan is under the name of one spouse. Let’s explore the laws and legal options for cases that involve a car loan during a divorce. 

Understanding the Implications of Having a Car Loan Under Your Name During Divorce

Arizona is a community property state, where the marital assets and liabilities are generally divided equally between the divorcing couple. If the car is under just your name, it can impact the divorce proceedings. Even if the car is awarded to your spouse as part of the arrangement for dividing marital assets, you would still be legally responsible for making the car payments until the loan is fully paid. 

If you don’t make timely payments or default on the car loan, you could face legal consequences and suffer a hit on your credit score. Getting another loan in the future with a poor credit score will be difficult.

Even if you can escape legal penalties, you may still be chased by creditors who have the right to collect on the debt. Ideally, you and your spouse should come to a reasonable agreement to deal with this situation. For example, your spouse could agree to pay off the car loan as they use the car. However, reason and logic are often missing in divorce cases. 

Legal Options to Address a Car Loan Issue In Divorce Proceedings

Your first effort should be to have an amicable settlement with your spouse. You can choose to transfer the ownership of the vehicle to one party, to relieve the other party of the financial burden. However, this transfer is subject to approval from the lender. 

If the car loan is under your name and you have been awarded the vehicle by the court, you have the right to sell the vehicle. If the car loan is under your name but the vehicle has been awarded to your spouse, then things get a bit more complicated. You’ll have to communicate with your spouse to reach an agreement. 

If you can’t reach any agreement, then your last resort is to seek legal intervention. The court will consider several factors, including vehicle usage and financial contributions to the car, to make their judgment. A family law attorney can assess your case to guide you on the best legal option for a fair resolution to the dispute. The attorney can request the court to issue a refinancing order so that one party can refinance the loan to remove the others’ liability. 

Consult with a Family Law Attorney 

At the Law Office of Cosmas Onyia, we specialize in divorce cases. We offer expert advice and solutions for individuals facing challenges with car loans during divorce. Using our deep understanding of divorce laws in Arizona, we fight to protect the rights of our clients. If you would like to benefit from our experience and legal expertise, get in touch with us to schedule a consultation with a divorce lawyer.