Three Options When Your Ex Can’t Refinance The Car

refinance car divorceBy Jennifer M. Paine

Cordell & Cordell Divorce Lawyer

So your wife is keeping the family car that is leased or loaned in your name, huh?

Most guys in your position would worry that she will “forget” to make the car payment, or will not pay off the loan in time, or will wait to the last minute to do either and let your credit score take a hit in the meantime (out of spite or sheer enjoyment or otherwise).

What’s worse, if she is unable to assume liability for the lease or refinance the purchase loan, then even if your divorce judgment says she is responsible for the payments, the car creditor will come after you.

This is because the creditor is not bound to your divorce judgment and, frankly, does not care what your now ex-wife agreed to do with the payments. Instead, the creditor will take the payment from you, or even sue you for it, then force you to pursue your ex-wife for reimbursement.

What can you do to avoid this result if she cannot refinance? Consider these three options:

Option 1 – Take It.

If you take the car, at least then you know when payments are made, that it has insurance, and you’ll know when the time is right to trade it in for another vehicle. More likely than not, the vehicle will not have equity, which means you will not have to pay your wife to take it off her hands, anyway.

Cordell & Cordell understands the concerns men face during divorce.

Option 2 – Pay It.

If you prefer that your soon-to-be-ex keep the vehicle but you still want to be sure she pays for it, then you should pay for it.

You could make the payments outright, as a monthly property settlement payment that is non-taxable income to her (and not deductible for tax purposes to you) or as alimony (that is taxable to her and deductible to you).

Or, in most state child support schemes, you can treat the monthly payment as child support and deduct it from your child support obligation. Child support, after all, is intended for your child’s daily necessaries, and transportation to and from school, sports, and activities is chief among them.

However, be sure your child support order provides that you will make the payment directly to the car creditor. Otherwise, you will have to rely on your ex to make the payment in full and on time.

Option 3 – Repo It.

Finally, if you do not want the vehicle and you are not paying child support or alimony, then be sure to give yourself the rights of a repo man if your ex misses or delays payments.

In most jurisdictions, spouses’ agreements for dividing property – including what happens when one of them defaults in an obligation – are enforceable as a matter of contract law.

This means, the spouses can be creative, give each other rights and obligations, and the court must enforce them absent a public policy reason (e.g., you cannot contract to set the vehicle on fire if your ex misses a payment).

So, get creative! Require in your divorce judgment, as you would with a contract, that she provide you:

  1. proof of her efforts to refinance the debt every month;
  2. proof of timely payments;
  3. proof every quarter that the vehicle is properly insured; money for every day that the payment is late;
  4. attorney fees and costs if you have to sue her for payment; and/or
  5. an extra set of keys that you are to use only if she defaults in her payment obligations  and you decide to take possession of – and responsibility for – the vehicle thereafter.

Otherwise, you could very well find yourself paying for a vehicle that is not yours – while your credit score takes a hit – and that you cannot regain, while your then ex-wife drives off scot-free.

Cordell & Cordell:

Divorce Attorneys For Men

Jennifer M. Paine is a Michigan Divorce Lawyer with Cordell & Cordell. She is licensed to practice in Michigan, and has been admitted pro hac vice in Illinois, Ohio, and the United States Court of Federal Claims.

Ms. Paine received her Bachelor of Arts in English and Mathematics from Albion College and graduated Summa Cum Laude. She received her Juris Doctorate from MSU College of Law and graduated Summa Cum Laude.

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8 comments on “Three Options When Your Ex Can’t Refinance The Car

    Say the roles are reversed it$ not just men who help a ungrateful exes lol I have a truck in my name that I don’t drive but have separated for good and he being a jerk will ruin my credit more then he already has with this truck if I don’t stop him. I need to know how to refinance the vehicle under his name to no longer have to worry or talk to him ever again! If someone can advise me id so greatly appreciate it…Thanks!

    THIS IS MY EXACT SITUATION! I’ve been asking him to refinance in his name, but his credit is too terrible. We are both on the title so I can’t just sell it if he’s late on a payment. I’m wondering if it’s possible to get him to sign a contract saying if it’s not paid by X date each month, it will be listed for sale and he will sign off on the title. He also just lost his job and claims he can still make the payments……

    as im in the same situation, option one is for him to refinance and pay it off(i guess not) option two is offer a few dollars to ease the pain and take the car and either sell it. or refinance to a lower rate while you look to get rid of it…other a snatch and grab will bring about crazy episodes of stalking and bad blood

    If in the final divorce decree it states I am financially responsible for the vehicle in my ex- husbands name and he is responsible for the vehicle that is in my name, if I quit paying on the vehicle I am responsible for and it gets repoed, what could happen?

    This is great advice all around. I was a similar situation some years back. Because we had no kids and I had already moved on, I repoed the car when she defaulted on payments. This was required in our divorce judgment that she make payments, since the SUV (mind you) is in my name. Are there any other forms of similar property whose post-divorce upkeep one can factor into a divorce judgment?

    My grandson is going through the a similar situation. He has the title in his name But doesn’t have the key. so how does he repo the car.

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