Can I Sell My Car During Divorce?
It is usually not a good idea for a spouse to sell a car during a divorce. You might wonder if you are going through a divorce and the car is in my name, why can’t I sell it? This is because the divorce process has a number of important financial implications. If you purchased the car during the marriage, it may be considered a marital asset, and your spouse may be entitled to a portion of its value. If you sell the car during the divorce process, the transaction may be called into question. The court may think you sold it out of malice or to a friend for a discount. By selling the car, you may even be in violation of the court’s order if there was a standing order or temporary order in your case that restricted the sale of assets.
If you are considering selling a vehicle during the divorce process, it is usually best to discuss this with your spouse and get their consent, preferably in writing.
Who Keeps The Car?
By now, you might be wondering during a divorce who keeps the car? You and your spouse are generally free to make your own decisions regarding the division of your property. If your spouse agrees that you can use the car during the divorce process, that is usually sufficient for you to continue using the vehicle. If you and your spouse agree to sell the car, that may also be fine.
If you and your spouse cannot agree on the subject of if you get a divorce who gets the car, the court will make the determination. This decision will be based on state law and the judge’s determination after hearing legal arguments.
Community Property States
In community property states, any assets or income obtained or earned during the marriage are typically considered “community property” and both spouses have an equal right to the property. There is usually a presumption in these states that any property acquired during the marriage is community property. If a spouse wants the property determined to be separate and not community property, they will usually have to prove this. Property that may not be community property includes property that was:
- Given to one spouse as a gift or inheritance
- Acquired before the marriage
- Acquired through only one spouse’s money
- Acquired when the couple was separated
- Identified as separate property in a valid prenuptial or postnuptial agreement
Equitable Distribution States
Most states are equitable distribution states. In these states, the court determines how to fairly – but not necessarily equally – divide property. In some of these states, there is a presumption that a 50/50 split is fair, but this presumption can be overcome by demonstrating relevant factors favor a different arrangement. Factors that family law judges can consider when dividing property often include:
- The length of the marriage
- The physical and mental health of each spouse
- The custody arrangement
- The separate property available to each spouse
- The contributions each spouse made to the marriage, including raising the children and taking care of the marital home
- The education, work history, skills, and earning capacity of each spouse
- The standard of living established during the marriage
- The tax implications of the property division
- The financial needs of each party
- Whether spousal or child support is being ordered
Some states take into consideration the fault of the parties that led to the divorce while others only consider fault if it has a financial effect, such as a spouse wasting marital funds on an affair partner.
Marital Property vs. Separate Property
In most states, only marital property is subject to be divided by the court. When determining how to divide property, the court usually first identifies it as marital property or separate property.
Marital property is generally any property that is obtained during the marriage that is not considered separate property.
If you are thinking that because you are going through a divorce and both cars are in my name that you will automatically receive both vehicles, you may be mistaken. Property may not be classified as separate property just because the way it is titled. Instead, separate property is usually limited to property that was:
- Owned by one spouse before the marriage
- Obtained by one spouse by using their separate property
- Received as a gift or inheritance by only one spouse
- Designated as separate in a valid prenuptial or postnuptial agreement
- Personal injury awards for the pain and suffering of one spouse
So, if the car title is in your husband’s name, this may not mean that he will be awarded the vehicle. Generally, all other property that is obtained during the marriage is considered marital property, regardless of how it is titled.
If you and your spouse agree only one of you will be the owner of a vehicle or if the court orders you to transfer ownership, you will need to make the transfer legal. In addition to having this information clearly stated in your divorce decree, you will need to have the person relinquishing their interest in the vehicle sign the title over to the other spouse. The new solo owner of the vehicle will then need to register the vehicle in only his or her name.
Valuing The Vehicle
Before signing the title, you may want to value the vehicle so that you can be sure to receive assets of a similar value or the court may order you value the vehicle. There are a few ways you can determine the value, such as:
- You and your spouse agreeing on the value
- Using an independent evaluation site like kbb.com
- Using a professional appraiser
One Spouse Buys Out The Other
In some situations, one spouse may need to buy out the other spouse’s interest in the vehicle. This may be possible by:
- Giving the other spouse cash equal to their interest in the vehicle
- Exchanging other assets of a similar value
- Refinancing the car loan and giving a portion of the proceeds to the spouse for their share in the vehicle
Car Loans and Divorce
The process can become a little more complicated if there is still a car loan during the divorce. Here is what you need to know about this process.
How to Transfer A Car Loan After Divorce
If you are worried because you are in the situation of going through a divorce and the car loan is under my name and your spouse is going to be the new owner, you can take steps to minimize your risk. You will still continue to be responsible for making car payments until your name is removed from the loan. This process is usually completed by refinancing a car after divorce.
Refinancing After Divorce
The spouse who will be the sole owner of the vehicle can ask the existing lender to refinance the vehicle in his or her name. The lender will pull a credit report and determine if it will refinance the vehicle and under what terms. Alternatively, the spouse can seek out a new lender who can buy out the loan from the original lender. Once a new loan is in place, the other spouse’s name can be removed from the loan and he or she is no longer obligated under the previous loan.
Can A Car Be Repossessed During Divorce?
One headache that you should not have to worry about is car repossession during divorce, but if your spouse does not keep up on the payments, this can happen. Even if the court has made a temporary order saying only your spouse is responsible for making these payments, your lender is not bound by this order and can still pursue payment from you if you are listed on the loan. If payments are not made, the vehicle can be repossessed.
Changing Insurance Policies
The last thing you will need to do is to put in place car insurance after divorce. The spouse who is the sole owner will usually need to obtain insurance in their own name. Once this has been completed, you can generally remove the spouse’s name from the previous auto insurance policy that was in both spouse’s names. Depending on the spouse’s age, driving history, gender, and claims history, this may be more or less expensive than in the previous arrangement.
Seeking Legal Assistance
If you and your spouse can agree on how to resolve the issue involving vehicles, that will be one less thing for you to worry about. If not, you may wish to seek legal assistance and learn more about your rights and obligations regarding a vehicle you purchased or used during your marriage.