There are really three potential parts to a divorce: one - possible child custody, parenting time and child support issues; two - potential alimony issues, and three - the division of assets and debts. Divorce lawyers generally refer to the part of a divorce that deals with dividing assets and debts as the property division portion of the divorce. In fact, when it comes to the end of a divorce and the judge signs the Judgment of Divorce, most well written divorce judgments will be divided into these different subdivisions by roman numbers and subject headings.
Vehicles are Handled as Part of the Property Division of a Divorce
Most property in a marriage is considered joint marital property. Most vehicles will be considered joint marital property and subject to division as part of the divorce. The only time a car might be considered the separate property of one spouse and not subject to division would be if the spouse owned the car before the marriage, it was given specifically to that spouse alone during or before the marriage or that spouse alone inherited it during or before the marriage. Even in those instances, if the owner spouse spends any marital funds on that vehicle, then most likely it will lose its qualification as separate property and become marital property subject to division. What this means is that in most cases the vehicles values are determined by looking at the Blue Book value, or in some cases through an appraisal, and then subtracting the balance of any loans owed on the vehicle. This value is then offset against other assets, such as the value of the other spouse's vehicle, equity in the home, cash or other valuable property.
But Who Gets What Vehicle?
There are many instances where one spouse will be driving a vehicle but the title of the vehicle and the loan associated with the vehicle is the name of the other spouse. Sometimes this will be true of both vehicles. Typically, the court will award the vehicle to the party that has been using or driving the vehicle and order the other spouse to transfer the title to that spouse. However, because the court cannot control the bank that holds the loan, the loan will remain in the name of the other spouse. This creates some liability for the other spouse, but the court will also order that the spouse to whom the vehicle was awarded must pay the loan associated with the vehicle in a timely manner and indemnify and hold the other spouse harmless from any lawsuit filed by the bank in the case of default. Then if the car owner/driver spouse defaults on the loan, the other spouse must take the defaulting spouse back to the divorce court and get the divorce court to order the defaulting spouse to reimburse the other spouse for the outstanding debt and attorney fees associated with defending against the default. it is not a perfect solution, but that is most likely how the court will handle these cases.
Even some of the most simple aspects of a divorce, like who gets what vehicle, can be complicated. If you are considering a divorce or your spouse has threatened you with a divorce, it is important to have good legal counsel from the first step to the last. Please do not hesitate to contact us to schedule a consultation.