Keeping Your Car in a Divorce


  • A state's status as an equitable distribution state or a community property state will come into play.
  • Car loans and debt can be tricky waters to navigate.
  • Appraisals are needed for classic or specialty cars in divorces

"Many couples enter a divorce with unpaid debt left on their cars, and since the title of the asset does not determine who it belongs to, couples that wish to keep their vehicle may have to either pay the remaining balance on the rest of the vehicle or share in the balance of both debts."

Transportation is a necessary component of today’s daily routine. We, as individuals in society, rely on it to get to where we need to go, and in order to make that happen, having a car becomes a necessity. During a divorce, that necessity becomes an asset if it was paid for or being paid for during the course of the marriage.

Due to how asset division works in the divorce process, your individual state’s status as an equitable distribution state or a community property state, come into play, in deciding how things are divided. Part of the process will include the courts determining what constitutes marital property and what constitutes separate property.

Financing woes

Cars can be difficult to sort through for courts, due to how they are financed. Many couples enter a divorce with unpaid debt left on their cars, and since the title of the asset does not determine who it belongs to, couples that wish to keep their vehicle may have to either pay the remaining balance on the rest of the vehicle or share in the balance of both debts.

As such, car debt can be something attributed to a divorcing party or split between the two, depending on the state. In a community property state, you can be held responsible for debt incurred by your spouse, according to The Huffington Post. This responsibility also includes any debt that you were unaware of and did not sign an agreement with a creditor. This means that a creditor can look to you for payment of a debt you did not incite.

After the agreement is made in splitting the debt, this prospect can be especially dangerous if your ex-spouse does not pay their share. If this occurs, it will negatively impact your credit rating, unless you know to include an indemnity clause to your divorce settlement.

This clause will allow you to take your ex-spouse back to court for any funds you would have had to pay, as a result of the loan going into default. That being said, the indemnity clause needs to be included in the final divorce agreement before signing.

Rule of 10

In some states, if a couple has been married less than 10 years with no children or joint bank accounts, the justice system views the goal of the divorce not as a splitting the assets equally, but instead, as putting each spouse back in the position they would have been in had they not gotten married, according to Hagerty Insurance.

This rule can often help car owners maintain complete control over their cars. However, due to it being dependent on the state, the use of the rule has been widely varied, depending on individual facts and circumstances surrounding the case itself, as well as the court’s interpretation on the rule.

Classic cars

For many out there, owning a classic, custom, late model, or collectible car can be a dream-come-true moment. With all of the restoration and maintenance that it often takes in making sure that the car is just as nice as the year that it came out, it can become a costly asset in divorce proceedings.

In order to ensure that you get, at least a portion of the car, getting it appraised by a professional that you trust is a necessary step. Knowing the value of the car is important, because insurance companies may try to undervalue your vehicle, in their assessment of any claim you have with the car, according to the Auto Appraisal Network. Insurance companies also are not always provided with the most information when they assign a value to the car, thus they find themselves undervaluing them.

Going off of the insurance company’s value of the car will not give the most honest depiction of what the car is actually worth. A professional will be able to create a better picture for the courts, especially if there are more than one specialty cars in question and custody of these cars are in dispute.

Many times, a soon-to-be ex-spouse will get a professional that they trust to offer an additional appraisal on both vehicles. This can be a dangerous strategy that can backfire on both parties, because if the two parties cannot agree on a value for the car or cars, the judge can order that the vehicle or vehicles be sold with the proceeds distributed appropriately, according to Newsday.

Need to go

With cars being a necessary part of routine travel, it seems like it would be easy to illustrate their importance in any divorce proceeding, but the facts and details of individual situations are factors needed to provide context and for mediators and courts to make more informed decisions.

One thing to keep in mind is the necessity of transportation for an ex-spouse, as well. With the amount of destruction and fighting going on back and forth, it can be healthy to switch gears into a new perspective for a minute, especially if custody and children are in the mix. You both need to be able to get where you need go, and in today’s world, a car is the most useful asset you both own in making that happen.

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