Who Gets the Car in a Divorce?

How to divide marital assets is one of the top goals of any separation agreement.  Separating and divorcing couples need to divide household items, cash, debts and many other assets.

One of the biggest assets after the house will likely be any automobiles the couple owns. Some may think that it is as easy as just saying, “You get the car you’ve been driving and I get the car I’ve been driving”.  Assume that each car is paid for in full, and worth $10,000 each. One spouse gets car A and the other spouse gets car B.  Easy, right?

Unfortunately, when sorting out the case of who gets the car in a divorce, it’s not always that simple.

Determining the Worth of a Car

First, each car needs to be valued.  That is simple; there are many online valuation tools.  There is the Kelley Blue Book, Edmunds, and other similar valuation tools.  Be aware though, a car’s resell value will likely differ from its loan value or trade-in value.  And, if there is money owed on the car, then that debt needs to calculated into the overall division of assets and liabilities, aka equitable distribution. The matter gets a little more complicated if one of the cars is “upside down”, worth less than what is owed.  Thought needs to be given to this situation: is it better to keep that car?  roll that debt over into another car?  Perhaps the parties need to downsize and economize with their autos?

Another complication can arise if one spouse is the only party listed on the car loan, but the other spouse wants that car.  If one spouse wants to retain the car in the divorce that he or she has been driving and using but the car loan is in the other’s spouse name, there are some options.  (Note-we can’t obligate an ex on a car loan.)

The car loan could be paid off or satisfied.  Those monies need to be tracked in the overall property distribution.  Another option could be the party who wants to keep the car can re-finance it in his or her name.  There may be another family member, a parent or sibling, who could help that person qualify for a new car loan.

Divorcing parties need to realize that refinancing or paying off that loan are the only ways to “remove” oneself from a car loan.  Naively, some folks think that they can contact the creditor and just remove themselves from a car loan.  Creditors are not going to remove a party from financial liability until the debt has been satisfied.

What Other Options Are There?

Another option is for the parties to sell the car(s) and divide the proceeds.  Hopefully enough is netted to buy another car and/or make a down payment for another vehicle.

This information is often applicable for other motorized items:  motorcycles, boats, jet skis, and ATV’s.

A related issue will also be insurance on these items.  Each spouse will need to obtain their own separate automobile insurance.  A divorcing couple needs to also address how repairs and upkeep expenses will be handled during the separation.

Other than one’s home, a person’s car is typically that person’s largest and most valuable asset.  Great care needs to be given to how to divide the cars in a divorce. If you find you are having trouble, contact us for a referral or to schedule a consultation with an attorney at 919-787-6668.

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