What to Do with Your Car Title after Divorce
- How cars are split up in divorce
- What happens to a joint car loan in a divorce?
- How to update your car title after a divorce
- FAQ about car titles and divorce
In divorce, you and your spouse must split any assets that are considered to be "marital assets." In most situations, the court views cars and similar vehicles as marital property. If you each have separate vehicles, splitting these assets should be simple and straightforward. If you share a vehicle, however, more questions arise.
How are cars split up in divorce?
First, it's important to identify who holds the title for a vehicle: you or your spouse, or both of you. If the title is only in your spouse's name, most states still consider it marital property if the vehicle was purchased during the marriage. If the car was owned by your ex before the marriage, however, your ex would be able to keep the title in their name.
Keep in mind that you can decide what to do with the car title before your divorce is finalized. In other words, you and your spouse could decide together who gets the car, and this could be notated in the separation agreement. Notably, however, if your divorce is contentious, the two of you may be unable to reach an agreement about the vehicle. In that situation, the court would decide who gets the car. If you need help understanding how best to split up your car loan and property in divorce, a divorce finance expert can help.
The car title, car insurance, selling the car, etc. are a few of many pieces to the puzzle and this checklist will help you prepare for your Next Chapter.
How does the state I live in impact who gets the car?
The state you live in may impact who gets the martial car, depending on whether it's an equitable distribution state or a community property state. If you live in an equitable distribution state, the judge must divide the property in a manner that seems balanced and fair. This decision is based on many factors, including who drives the vehicle the most.
In a community property state, in general, marital assets and property are divided in half (unless the spouses decide and agree on another way to divide the property. Nine states are considered to be community property states:
Since a car can't be divided in half, the judge will likely decide who gets the car in a community property state if you can't agree on it during your divorce. To keep it fair, they will also provide the other spouse with the property of similar or equal value.
What happens to a joint car loan in a divorce?
If you and your spouse have a joint car loan, it's important to understand that the lender will still view it as a joint car loan after your divorce. So, for example, if the judge awards you the car as part of the divorce agreement, the lender could still go after both parties if payments were missed. And, most lenders won't refinance a loan to allow the removal of an ex's name off the title.
If your spouse has been awarded the vehicle and you want to make sure they don't stop paying the loan, you could have a statement placed in the divorce decree giving you the power to take possession of the car if your ex-spouse fails to pay on time. Further, if your ex-spouse neglects to make the necessary car payments, you could ask the judge to hold them in contempt of court for going against the divorce decree.
How do you update your car title after a divorce?
If you're transferring your car title from one person to the other or switching from a joint title to just one spouse, the process is surprisingly straightforward. First, you will need to take the title to the state DMV. If liens are listed on the car title, show up to the DMV with a lien release document in your hand. In the event that a judge awarded you the car, some states accept a standard copy of the divorce decree as proof of your claim. However, you may still need your ex-spouse's signature on the title. You will also need to sign the title before submitting the document to the DMV. Your state DMV will then provide you with a new title. (Make sure you have proof of auto insurance as well.)
Transferring a car title to your ex-spouse
If you've been ordered to transfer a joint title to your ex-spouse, your ex must apply for a new title in their name. You can sign the title to indicate you approve of the transfer.
Removing your ex-spouse from your car title
If you would like to remove your ex-spouse from a car title in your possession, the above directions should be completed in reverse. Fill out a new car title and take it to the DMV. The title may need to be signed by you and your ex in the presence of a notary, but most states accept a divorce decree as proof that a vehicle is to be transferred from one spouse to the other.
FAQ about car titles and divorce
Can I sell my car during my divorce?
You may be able to sell your car during your divorce if you purchased it before the marriage began. However, any vehicle purchased during the marriage is marital property. In this situation, your spouse would need to agree to sell the vehicle. You would also be tasked with providing your spouse half of the proceeds if divorce proceedings are ongoing.
After the divorce, the situation largely depends on whose name is on the title. If a joint car title has been transferred to you, you're free to sell the car whenever you want. There are, however, some issues with selling a financed car that has yet to be paid off. As mentioned previously, you and your ex-spouse would be liable for payments until the loan is paid off. You can remove your ex-spouse's name from the loan if your lender agrees to refinance the loan.
What if my spouse refuses to sign the car over to me?
Legal recourse is possible if your ex-spouse refuses to sign the car over to you. If the divorce decree ordered the car to be signed over to you, your ex must abide by the decree. If they don't, you can ask the judge to hold your ex in contempt of court. In the event that the judge agrees to your request, the court can help you take possession of the vehicle, issue fines against your ex, or make sure your ex pays your attorney fees.
Now that you know what to do with your car title after your divorce, you can be confident that the process will be completed without issue.
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