Understanding divorce and your car loans, pt.1

During a divorce, you can become rather focused on your goal of separating yourself and your finances from your spouse. If you don’t have children and won’t have a child custody agreement or visitation issues to deal with, you may be able to make a fairly clean break from your former spouse.

Your divorce settlement is a contract that divides your assets and liability and apportions them between you and your former spouse. If, like many Missouri residents, you owned multiple vehicles, in the property division section of your divorce settlement, you probably assigned one vehicle to each party.

Of course, when you purchased the vehicles, during happier times, it is also likely that you both signed the paperwork of the loan agreement for the vehicle. This is important because that document controls the legal obligations for repayment of that loan.

While your divorce agreement may assign each vehicle to only one party, if the loan documents indicate both were jointly obligated, it will control. So, if your former husband or wife stops making payments on the vehicle they are driving, that lender can, and most likely will look to you for repayment.

This is because the loan contract controls who is obligated for the loan repayment and the divorce settlement cannot modify that contract. If your former spouse stops paying and files bankruptcy, they could discharge the debt. Even if they surrender the vehicle, there will likely be a deficiency balance and the lender would likely demand payment from you.


Source:, “Divorce does not change obligations on a car note,” Richard Alderman, June 13, 2016

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