Spouses preparing for divorce have to address their joint financial matters. Married couples usually share their income and assets. They also assume joint responsibility for debts.
Choosing how to divide financial obligations and split up shared property is often one of the most contentious aspects of divorce. Some assets can be particularly difficult to address because of their value or importance in daily life.
Many couples have financed vehicles that they acquired during their marriage. Who gets a financed vehicle in a divorce scenario?
The vehicle is both an asset and the source of debt
Addressing a financed vehicle can be difficult in part because it represents both value in the form of accumulated equity and debt. Whatever amount is still owed on the loan is a financial obligation that the spouses must address.
In some cases, the spouse who currently drives the vehicle might keep it and assume responsibility for the future loan payments. Other times, a spouse who cannot afford the vehicle might retain it, while the other spouse assists them in making payments as part of an equitable property division settlement.
Spouses or the courts have to consider issues ranging from the amount owed and the income of the individual spouses to custody arrangements when deciding what should happen with the vehicle. Typically, those keeping a financed vehicle after divorce must refinance to remove a spouse as a co-borrower and to take their name off the title paperwork for the vehicle.
Making a list of top priorities while preparing for divorce negotiations could help people push for optimal outcomes. Spouses who rely on a financed vehicle with a loan balance still due may need to consider what they can afford and their need for transportation as they set goals for an upcoming divorce.